PA Supplier Workshop January 16 2019 Agenda Supplier

PA Supplier Workshop January 16, 2019

Agenda ■ Supplier Workshop Objective ■ Default Service Program V (“DSP V”) ■ Customer Referral Program Overview ■ Recent Issues – Incorrect Rate Ready enrollments ■ Open Forum – Customer Referral Program operational enhancements PA Supplier Workshop January 16, 2019 2

Supplier Workshop Objective ■ Default Service Program IV (“DSP IV”) Settlement Term – The Companies agreed to reconvene their supplier workshops so that Customer Referral Program Suppliers and the Companies are provided a collaborative forum to discuss operational enhancements that can be implemented by the Companies and the EGS participants to improve administration of the program. PA Supplier Workshop January 16, 2019 3

DSP V June 2019 – May 2023 Item DSP V DSP Term* 4 Years Procurement Method Descending Clock Auction Procurement Contract Full-Requirements Load Following Residential: Mix 12 (50%) and 24 (50%) Month Contracts Procurement Contract Duration Commercial: Mix 3 (28%), 12 (36%) and 24 (36%) Month Contracts Industrial: Spot Procurement Months* January, April, June and October/November *Change as compared to DSP IV PA Supplier Workshop January 16, 2019 4

DSP V Terms June 2019 – May 2023 Item DS Supplier Responsibility DSP V Generation, Transmission, Ancillary and AEPS (excludes RTEPs and TECs, RMR, Unaccounted for Energy and Out-Of-Market meter adjustments) DS Supplier Responsible For 100% Non-Solar Tier I and 100% Tier II AEPS DS Supplier Contract Payment Solar Tier I Procurement (exception is WP, where DS supplier is responsible for AEPS solar, Tiers I and II less existing purchases; beginning November 1, 2017, per Docket M-2017 -2631527, SPAECs generated after October 31, 2017 must be generated in PA to satisfy AEPS solar requirement) Residential: 95% Fixed, 5% Spot + Adder Commercial: 100% Fixed Industrial: 100% Spot + Adder Two 2 -Year RFPs - First auction March 2019, second auction March 2021 (procure enough SPAECs to meet 100% solar Tier I requirement for ME, PN & PP) PA Supplier Workshop January 16, 2019 5

DSP V Terms June 2019 – May 2023 Item Customer Classes* Retail DS Rate Structure DSP V Residential, Commercial and Industrial (Hourly pricing threshold lowered to 100 k. W) Residential & Commercial: Flat Rate Industrial: Hourly Rate Residential & Commercial: Quarterly (w/PTC known 45 Frequency of Rate Changes days in advance – except where auction is within 45 days of power flow) Industrial: Hourly Customer Referral Program Retain Existing Program And Cost Recovery Until May 2023 *Change as compared to DSP IV PA Supplier Workshop January 16, 2019 6

FERC 494 Issue ■ Docket No. EL 05 -121 -009 concerns the reallocation of PJM Regional Transmission Expansion Plan charges for certain transmission facilities that operate at 500 k. V and above within the PJM footprint. ■ The Companies’ will process all credits and/or charges resulting from the FERC Settlement on behalf of their customers and suppliers (both wholesale and retail) by directly passing the credits and/or charges on to their customers through the Companies’ Default Service Support (“DSS”) Riders. PA Supplier Workshop January 16, 2019 7

Hourly Pricing Threshold ■ Companies will lower the hourly pricing threshold to 100 k. W effective June 1, 2019 where smart meters will be used for hourly pricing billing. ■ Change complies with Commission’s policy statement in the Retail Market Investigation (RMI) proceeding. ■ Affects GS-Medium Customers as rate schedule will be split into GS-Medium (PTC) and GS-Medium (HPS). – These designations do not result in a new rate schedule. ■ Penn Power GS-Large will also move to Hourly Pricing. – GS-Large rate schedule was created in the 2014 base rate case. – Due to metering restrictions these customers have been served under the PTC Rider. – Smart meters are now installed to meter hourly pricing. PA Supplier Workshop January 16, 2019 8

Hourly Pricing Threshold Communication Plan ■ Information on www. firstenergycorp. com: – Hourly Pricing Explanation; – The “What is Hourly Pricing” slideshow; and – Links for Electric Choice. ■ Customer notification letters - – All Met-Ed, Penelec and Penn Power GS-Medium & West Penn Power Schedule 30 Customers. – Series of three similar letters notifying all customers. – Letters to be mailed November 2018, January 2019 and April 2019. ■ Penn Power GS-Large customer notification letter – Letters to be mailed November 2018, January 2019 and April 2019. PA Supplier Workshop January 16, 2019 9

POR Clawback Charge ■ DSP IV two-year pilot extended in DSP V for four years. – Begins with charges assessed in September 2018 based on a review of data for the twelve months ended August 31, 2018 and ending with charges assessed in September 2021. ■ Two-prong test to calculate the charge: 1. EGSs whose average write-offs as a percentage of revenues over the 12 -month period ending August 31 each year exceeds 200% of the average percentage of total EGS write-offs as a percentage of revenues per operating company. 2. Of those EGSs identified in the first prong, EGSs whose average price charged over the same 12 month period exceeds 150% of the average PTC for the period. ■ EGSs identified by both prongs are charged difference between an EGS’s actual write-offs and 200% of the average EGS write-offs per company. ■ Companies retain amounts charged to EGSs if each individual Company’s actual uncollectible accounts expense exceeds the amount of uncollectible expense in rates for the 12 -month period ending August 31. ■ Companies refund the EGS charge to customers through the Default Service Support Rider if a Company’s actual uncollectible expense is less than the amount of uncollectible expense recovered in rates. PA Supplier Workshop January 16, 2019 10

Purchase of Receivables EGS Arrears Report ■ The Companies committed to developing an EGS-specific customer arrears report with unpaid aged EGS account balances. ■ This report will be provided to EGSs participating in the purchase of receivables program. ■ The report will be issued on a quarterly basis. – 3 rd quarter 2018 report was issued October 19, 2018. – 4 th quarter 2018 report was issued January 15, 2019. ■ Information contained in the customer arrears report provided to each EGS shall only contain information regarding customers of that specific EGS. PA Supplier Workshop January 16, 2019 11

CAP Shopping Limitations ■ Effective June 1, 2019, customer assistance program (“CAP”) customers are prohibited from entering into any retail electricity contract with an EGS which would charge rates exceeding the applicable price to compare for the entire duration of the EGS contract. ■ EGSs are not permitted to enter into contracts with CAP customers charging early termination or cancellation fees. ■ EGS enrollments submitted for any CAP customers that do not meet these requirements will be rejected. PA Supplier Workshop January 16, 2019 12

Transitioning CAP Shopping Customers ■ For the purpose of transitioning CAP customers who are currently being served by an EGS, as of June 1, 2019: – CAP customers who are served under a fixed duration contract with an EGS as of June 1, 2019 may remain with their EGS until the expiration date of the fixed duration contract or the contract is terminated, whichever comes first. – Non-CAP customers served under a fixed duration contract who subsequently enroll in CAP may remain with their EGS until the expiration date of the fixed duration contract or the contract is terminated, whichever comes first. PA Supplier Workshop January 16, 2019 13

Transitioning CAP Shopping Customers – Upon expiration or termination of a pre-existing fixed duration contract, the EGS must either: (a) enroll the CAP customer under a contract compliant with the new CAP shopping rules; or, (b) return the CAP customer to default service. For EGSs serving CAP customers under a month-to-month contract as of June 1, 2019, the EGS must either: (a) return the CAP customer to default service effective June 1, 2019; or, (b) enroll the CAP customer under a compliant contract, with an effective date of June 1, 2019. – For EGSs serving non-CAP customers under a month-to-month contract who subsequently enroll in CAP, the EGS must either, within 120 days of the customer’s CAP enrollment: (a) return the CAP customer to default service; or, (b) enroll the CAP customer under a compliant contract. PA Supplier Workshop January 16, 2019 14

CAP Shopping Mechanics ■ Commission directed the Office of Competitive Market Oversight (“OCMO”) to convene a group of interested stakeholders for the purpose of collaboratively addressing the mechanics and details of the new CAP. PA Supplier Workshop January 16, 2019 15

Customer Referral Program Continuation and Scripting ■ The program will continue through May 31, 2023. ■ Commission directed OCMO to convene a group of interested stakeholders for the purpose of collaboratively addressing the scripting and training materials associated with the program: – (a) to ensure that such scripting and training materials will provide sufficient consumer education/protections and disclaimers to customers that are not misleading, and – (b) to determine the impacts that such scripting and training materials may have on customer enrollment in the program as well as any other competitive concerns. PA Supplier Workshop January 16, 2019 16

CAP Shopping Mechanics and Customer Referral Program Scripting ■ OCMO held the stakeholder meeting on November 5, 2018. ■ OCMO provided a report to the Commission with its recommendations. ■ The Commission entered a Tentative Order on December 20, 2018 allowing a 30 -day comment period for interested parties. ■ Comments on the Tentative Order are due to the Commission by January 22, 2019. PA Supplier Workshop January 16, 2019 17

Customer Referral Program Overview ■ The program is designed to encourage shopping in the Companies’ Pennsylvania service territories. ■ The program is offered to Met-Ed, Penelec, Penn Power, and West Penn Power non-shopping residential and small commercial customers. ■ The program offers a 12 -month fixed price that is set at 7% below the EDC’s current Price-To-Compare. PA Supplier Workshop January 16, 2019 18

Customer Referral Program - Customer Process ■ When a customer calls into the Companies’ Contact Center for a move-in, high billing question, or a question on energy choice, and are eligible, they will be offered the Customer Referral Program. ■ If the customer decides to participate in this program, they will be transferred to our third party vendor to select a supplier from one of the participating suppliers. ■ If the customer doesn’t have a specific supplier in mind, a supplier will randomly be selected for the customer through a round robin selection. PA Supplier Workshop January 16, 2019 19

Customer Referral Program - Supplier Process ■ A quarterly email is sent to all licensed suppliers in the Companies’ territories notifying them to express their intent to participate in the Customer Referral Program. ■ The supplier will be provided a deadline for their intent to participate. ■ The suppliers who wish to participate will send by email their contracts including Appendix C (Intent to Participate) stating what operating companies they wish to participate in. The supplier may participate in Residential and Small Commercial, separately or together. – For first-time participants, this is required no less than 60 days prior to the quarter. PA Supplier Workshop January 16, 2019 20

Customer Referral Program - Supplier Process ■ The Price to Compare will be released during the months of January, April, July, and October, depending on the quarter. At this time an email will be sent to participating suppliers communicating the PTC, as well as an intent to withdraw date. – The participating suppliers will use the PTC to determine if they want to participate in the Customer Referral Program for the quarter. PA Supplier Workshop January 16, 2019 21

Supplier Requirements ■ Must be a registered EGS for the territory in which they would like to participate (ME, PN, PP and/or WP). – Must complete supplier registration. – Upon delivery of registration application and review of documents, the supplier will be contacted to complete EDI testing for Rate Ready billing. ■ Assume load responsibility. ■ Accept and enroll all referred customers in the Customer Referral Program. ■ Utilize a Rate Ready bill method only. – Supplier must serve the customer on the Customer Referral fixed rate for 12 consecutive billing periods. PA Supplier Workshop January 16, 2019 22

Supplier Requirements ■ The supplier must complete and sign the contract and, for firsttime participants, return it at least 60 days prior to the start of the quarter if they wish to participate. – This contract does not need to be completed each time as long as nothing changes from previous quarter participation. ■ If the supplier totally withdraws for any quarter, the supplier will need to complete a new contract to participate. ■ Participating suppliers will be invoiced monthly. Any accepted enrollment sent with the “Customer Referral” rate will be charged $30. 00 per enrollment. Rejected enrollments are not charged. ■ The supplier is provided a timeline on the Companies’ website which provides dates for intent to participate and withdraw. PA Supplier Workshop January 16, 2019 23

Customer Referral Program: In & Out of the Program ■ Customer Referral Suppliers begin participation in the Program effective on the following dates each year: March 1, June 1, September 1, or December 1. ■ A new Customer Referral Supplier must provide the initial notice of their intent to participate in the Customer Referral Program at least sixty days prior to the desired effective date. ■ A Customer Referral Supplier that has previously participated in the Company’s Customer Referral Program must provide notice of their intent to participate at least thirty days prior to the desired effective date. – Note – If you are not rate ready tested for a Company in which you would like to participate, you must always follow the 60 -day timeline. PA Supplier Workshop January 16, 2019 24

2019 Timeline - 60 Day PA Supplier Workshop January 16, 2019 25

2019 Timeline - 30 Day PA Supplier Workshop January 16, 2019 26