Peoples Natural Gas Exhibit No. 2

THE PEOPLES COMPANIES COMBINED UFG MITIGATION PLAN

TO ADDRESS GATHERING PIPELINES

TABLE OF CONTENTS

INTRODUCTION AND BACKGROUND................................................................................ 1

DEDICATED UFG TEAM.........................................................................................................7

ADDITIONAL SEGMENTATION TO ENHANCE IDENTIFICATION OF POTENTIAL UFG TARGETS..........................................................................................................................10

ACCELERATED LEAK REPAIR PROGRAM - BARE STEEL GATHERING........................ 11

GATHERING PIPELINE IMPROVEMENT STRATEGY - HIGHEST VALUEACTIVITY...................................................................................................................................13

REMOVAL / REPLACEMENT OF AT-RISK GATHERING PIPELINES................................ 18

FURTHER ANALYSIS TO BE PERFORMED WITH RESPECT TO CERTAIN GATHERING PIPELINES......................................................................................................... 20

GATHERING PIPELINE ABANDONMENT CONSIDERATIONS AND COMMUNICATION.............................................................................................................. 21

MAPPING ENHANCEMENTS........................................................... ,................................ 22

GAS MEASUREMENT ENHANCEMENTS...........................................................................22

UNAUTHORIZED USE............................................................................................................ 23

POTENTIAL IMPACT ON UNACCOUNTED FOR GAS 24

INTRODUCTION AND BACKGROUND

This document is a UFG Mitigation Plan for Peoples Natural Gas Company LLC ("Peoples

Natural") for both of its divisions, Peoples and Equitable, and its sister company Peoples Gas

Company LLC, formerly Peoples TWP LLC ("Peoples Gas"). It sets forth the planned action steps

for addressing and mitigating unaccounted-for-gas ("UFG") levels on the Peoples Natural Gas

and Peoples Gas systems. Hereinafter when referring to the Peoples and Equitable Divisions

and Peoples Gas inclusively, they will be referred to as the Peoples Companies or the

Companies. The Peoples Companies committed to provide this report in settlement of their

respective 2017 Purchased Gas Cost proceedings, to resolve certain issues raised in those cases.

Peoples Natural and Peoples Gas operate integrated natural gas systems that serve

approximately 690,000 customers in southwestern Pennsylvania. The systems have access to

numerous interstate natural gas pipelines including Equitrans L.P., Dominion Energy

Transmission Inc., Texas Eastern Transmission LP, Tennessee Gas Pipeline Company, LLC, and

National Fuel Gas Supply Corporation. The Companies' systems consist of distribution,

transmission, storage and gathering pipelines and related facilities. The total combined

systems are comprised of 15,071 miles of distribution and higher pressure transmission main

lines as well as five1 on-system storage facilities within their service territories. In addition,

what makes the Peoples Companies unique when compared to other PA natural gas

distribution systems is that they own and operate extensive gathering systems that provide

direct access to local natural gas supplies. The Peoples Companies' gathering systems comprise

1 There is one on-system storage pool on the Peoples Natural system and four on-system pools on the Peoples Gas system.

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2,072 miles of gathering pipelines and 23 field compressor stations used to move local gas

supplies to end use customers. Gas moved through the Companies' gathering facilities

accounts for about 43 Bcf, annually. The Peoples Companies' gathering systems have

historically provided a direct benefit to ratepayers through lower purchased gas commodity

costs and reductions in interstate pipeline transportation capacity costs. On the other hand,

storage facilities, gathering pipelines and compressor assets contribute to the Companies'

levels of gas used in company operations and UFG. As a result, the Peoples Companies' levels

of gas used in company operations and total system UFG are higher than those of typical

distribution-only systems.

For instance, the Companies run 23 natural gas powered compressors to lower line

pressures to allow local wells to produce into the gathering systems. These compressors

consume about 850,128 Mcf/year of natural gas. Additionally, the Companies also use

approximately 20,013 Mcf/year of natural gas at the five active storage facilities to run storage

relay compressors and various dehydration units that treat and inject gas into the storage

reservoirs during the summer injection periods. The Companies also experience gas losses in

the operation of the on-system storage pools. Some of the gas injected into the storage fields

during the April through October time frame, for eventual withdrawal during the winter months

of November through March, migrates out of the reservoirs and is lost into neighboring

formations. The Peoples Companies experience approximately 79,500 Mcf/year in storage

related losses. These types of losses also occur in interstate storage pools, and are recovered

through commodity charges of interstate pipelines.

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Even though the Companies operate the gathering, transmission, storage and

distribution pipelines as an integrated system, in recent years the Companies have installed gas

measurement equipment at various strategic system locations for the sole purpose of isolating

a gathering system or a portion thereof and separately determining the UFG on that isolated

gathering system. The table below shows the UFG levels for recent years broken down

between gathering and distribution systems.

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Peoples Natural Gas - both divisions

Report Year*

Total Syst Loss (MCF)

Dist Loss(MCF)

Gathering

loss (MCF) Syst% Dist % PUC Target Gathering %

2011 7,424,345 5.35%2012 5,684,379 4.64%2013 5,855,836 4.35%2014 5,594,715 2,128,971 3,465,744 3.85% 1.58% 5.00%2015 6,158,463 2,224,549 3,933,914 4.45% 1.66% 4.50%2016 6,063,405 3,499,116 2,564,290 5.01% 3.05% 4.00% 9.20%

2017 5,807,031 2,749,205 3,117,826 4.84% 2.42% 3.50% 10.16%

8,000,000

7,000,000

6,000,000

5,000,000

4,000,000

3,000,000

2,000,000

1,000,000

■ Total Syst Loss (MCF)

■ Dist Loss (MCF)

2011 2012 2013 2014 2015 2016 2017

*The report year is twelve months ended August beginning in 2014 as required by the

UFG Reporting proceedures ^Vid twelve months ended July for earlier periods.

Peoples Gas

Report Year*

Total Syst Loss

(MCF)

Dist Loss(MCF)

Gathering

loss (MCF) Syst % Dist % PUC Target Gathering 9

2011 730,130 2.73%2012 956,437 3.81%2013 540,420 2.25%2014 792,146 792,146 2.88% 2.88% 5.00%2015 984,598 984,598 3.36% 3.36% 4.50%2016 1,099,569 1,099,569 3.95% 3.95% 4.00%2017 1,707,933 590,664 1,136,769 6.80% 2.47% 3.50% 9.5

1,800,000

2011 2012 2013 2014 2015 2016 2017

*The report year is twelve months ended August beginning in 2014 as required by the

UFG Reporting proceedures and tyvelve months ended July for earlier periods.

Some noteworthy factors for consideration of this data include that 2014 and 2015 were

colder than normal years when considerable additional gas supplies flowed into the Companies'

systems. The opposite was true for 2016 and 2017 which were warmer than normal years with

corresponding lower throughput. The percentage loss rates were lower in 2014 and 2015 when

throughput was high than in 2016 and 2017 when throughput was low. Even where the total

volumetric loss decreased, as occurred from 2015 to 2016 on the Peoples Natural Gas system,

the percentage loss could, and in fact did, still show an increase. Another significant factor is

that until 2017, Peoples Gas had insufficient segmentation measurement to separate gathering

loss from distribution loss. As UFG was rising in the immediately preceding years, gathering

segmentation was a primary step undertaken to identify and quantify which areas of the

system were contributing to the loss.

Each Company has a similar profile with the distribution UFG falling within the range of

acceptable performance when compared to Commission-adopted standards and a higher loss

performance relating to the gathering systems. In addition, as indicated in the table above,

each of the gathering systems represents the most significant contributor to the Company's

system UFG levels. As a result of the significant amount of gathering facilities owned and

operated by the Companies, the different operating characteristics of gathering versus

distribution systems, the higher UFG percentages on the gathering systems, and the large

volumes that move through these systems annually, the major focus area of this mitigation plan

is on ways to reduce UFG on the gathering systems.

The Peoples Companies have for a number of years filed with the PUC and implemented

UFG mitigation plans addressing system wide UFG reduction measures. These plans correctly

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focused on various traditional potential contributors to UFG such as inaccurate measurement,

pipeline leaks or breaks, unauthorized use of gas, and accounting estimates/procedures. While

this UFG Mitigation Plan addresses and provides updates on some of these traditional UFG

mitigation measures, it now has a heightened focus on gathering pipelines across the

Companies whose removal or improvement provides the highest overall value to the

Companies and our customers in terms of cost (measured against various factors such as

customers served, throughput, and length of pipe installed), and prospective expense or

expense savings or avoidance .

COMPONENTS OF THE COMBINED UFG MITIGATION PLAN

DEDICATED UFG TEAM

Despite regular attention to UFG mitigation over the past years, the Companies'

experienced increased UFG in 2015 and into 2016, particularly on the Peoples Gas system. To

address this a special dedicated UFG mitigation team was formed early in 2016. The

responsibility of the UFG mitigation team is to analyze these recent UFG trends and identify

system factors contributing to UFG and to devise and implement an ongoing and coordinated

action plan to reduce UFG on the Peoples Companies' systems. In June of 2017 a newly created

senior UFG engineering position was filled. The primary responsibilities of the UFG engineer is

to manage, coordinate, investigate and design UFG reduction initiatives for the Peoples

Companies. The team, now led by the UFG engineer, meets weekly and consists of

representatives across various company business segments which include: Field Operations,

Customer Service Operations, Engineering, Pipeline Construction, Gas Supply, Gas Planning and

2 Risk reduction continues to be addressed in the Approved Combined LTIIP.

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Modeling, Gas Measurement and Regulation, Compressor Operations, Gas Control, Local Gas

Acquisition, Producer Services, Regulatory Affairs, and Customer Billing. The team reviews UFG

issues and mitigation measures across the Companies' systems, but given the recent UFG

increases on the Peoples Gas system, the team had an initial targeted focus on mitigating UFG

on the Peoples Gas system. Some, but not all, of the UFG mitigation areas examined by the

team included:

• Detailed review and validation of system UFG calculation models

• Measurement testing at major interconnection supply feeds into system;

• Gas measurement enhancements and validations;

• Numerous isolation studies conducted on various major segments of higher pressure

pipeline laterals;

• Verification of larger end-use customer measurement and gas usage changes;

• Hot Leak List - Identification, tracking and prioritization of leaks/repairs on leak prone

areas that are suspected larger contributors to UFG levels;

• Gathering pipeline system remediation opportunities including repairs, replacements

and abandonments;

• Mapping enhancements to show ongoing pressures and volume changes within the

pipeline systems to help identify potential UFG loss areas;

• Opportunities for segmentation measurement to enhance identification of potential

UFG problem areas;

• Review of the Companies' theft of service processes; and

• Special leak surveys including aerial leak surveys.

8

A key initial finding from the UFG Mitigation team was that the gathering systems

located on the eastern section of the Peoples Gas system is the major contributors to elevated

UFG levels on Peoples Gas. The pipelines in this area are primarily used to gather and move

locally produced gas in a westerly direction to three major compressors which then in turn

move the production gas onto the main east-to-west pipeline laterals that feed the main

distribution systems and with the majority of customer usage located on the western section of

the Peoples Gas system. The team identified and implemented the following targeted

mitigation measures to reduce UFG levels on the Peoples Gas gathering systems:

• Knowing that the rate of gas leakage is correlated to the pipeline operating pressure,

steps were undertaken to reduce operation pressures on gathering systems by:

o Maintaining consistent coordinated operation of the three main PTWP gathering

compressor stations during non-winter periods;

o Strategically adjusting and reducing producer pressure set points at well

locations throughout the year; and

o Strategically managing interstate pipeline supply contracts in order to avoid

adding interstate gas supplies to the system during warmer weather periods

(while managing must-turn provisions of interstate storage contracts). This

strategy helps to maximize the flow of locally produced gas supplies and avoid

pressure increases on the gathering systems.

• Continue to target areas of highest UFG on the Peoples Gas gathering systems and

install additional measurement segmentation at strategic locations on the Peoples Gas

gathering systems in order to target areas of highest UFG, to more accurately capture

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actual levels of UFG, and to attribute that UFG to specific areas on gathering systems;

and

• Undertake a more aggressive leak survey and repair program on the systems that are

experiencing the highest levels of UFG.

The findings to date indicate that the Peoples Gas gathering systems have losses similar

to the gathering systems experienced on Peoples Natural Gas, and the Peoples Gas and Peoples

Natural Gas distribution systems have very similar loss rates that are within Commission-

established tolerances.

ADDITIONAL SEGMENTATION TO ENHANCE IDENTIFICATIONOF MITIGATION TARGET AREAS

Within gathering systems, natural gas is gathered directly from wellheads, transported

through pipeline transport systems, and delivered to customers via farm taps or to the city gate

into the distribution system. During this process, gas can be lost or not accounted for due to

system leaks, mis-identification of taps, inaccurate measurement (including that attributable

both to human or mechanical error and to natural causes, such as temperature and pressure

effects), or theft.

While each of these sources of UFG can be investigated and mitigated by physical

inspection and repair or correction, the complexity and size of the Companies' gathering

systems makes such site specific activity inefficient and expensive. In order to improve

efficiency - to get more bang for the buck - industry best practices require system

segmentation where each system or part of a system is segmented into a separate 'zone'. This

is accomplished by installing segmentation measurement. While a segmentation meter is a

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non-custody meter, for purposes of the UFG study, it will appear as a receipt meter into one

segment and a delivery meter into the adjoining segment. As non-custody meters,

segmentation meters do not need to meet AGA (American Gas Association) specifications, but

they still need to provide accurate measurement if they are to be relied on to quantify gas

flowing into and out of the segmented section, and as a result, their purchase and installation

are approximately as expensive as custody transfer meters. The Companies have a three-year

plan to install 3-4 additional segmentation meters each year. For 2018 the cost of the additional

segmentation meters is estimated to be $375,000. The meters will be installed in gathering

systems which appear to be experiencing higher UFG. Once segmented, the Company will be

able to assess the effect of mitigation measures and better direct the most effective mitigation

measures to the sources of the highest UFG.

ACCELERATED LEAK REPAIR PROGRAM - BARE STEEL GATHERING

The large majority of gathering pipelines owned and operated by Peoples Natural and

People Gas are located in Class 1 locations and therefore qualify as non-jurisdictional under the

DOT-PHMSA regulatory structure. As such, these gathering pipelines are exempt from most of

the pipeline safety requirements found in Title 49, Part 192, of the Code of Federal Regulations.

Nevertheless, the Peoples Companies historically operated and maintained these pipelines

according to the Companies' distribution pipeline operating procedures. As a result, these

pipelines have been subject to a triennial (once every 3 years) leak survey cycle. With a goal of

UFG mitigation, beginning in the 1st quarter of 2018, the Companies implemented an

Accelerated Leak Repair Program. Under this program the Companies will transition from a

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triennial to an annual leak survey cycle for DOT non-jurisdictional bare steel gathering pipelines

and prioritize the repairs of leaks found on those lines. While this program will address leaks on

the bare steel gathering pipelines located on the three legacy systems, the initial program (2018

and 2019) will have a primary emphasis on the Peoples Gas gathering systems that currently

are reporting increases in UFG levels.

This program has three designed action components:

1. Leak Surveys - Accelerate the leak survey cycle on the gathering systems, including the

clearing and mowing of rights-of-way, so that all active leaks can be more quickly

identified;

2. Leak Tracking and Prioritization - Identify, track, and prioritize areas of the gathering

systems and/or specific gathering pipeline segments that are prone to leakage and are

the largest contributors to UFG. The determinations made under this program

component will be based on accelerated leak survey results, information from the Hot

Leak List, experience and local shop knowledge, and UFG segmentation results; and

3. Leak Remediation - Use Leak Tracking information to perform accelerated leak repairs

on the highest priority gathering areas/segments. Other remediation steps may also

include the replacement of pipeline segments and pipeline abandonments (where

feasible).

In support of the Accelerated Leak Repair Program, the Companies have formed new

work crews who are dedicated to the Accelerated Leak Repair Program and are currently

working on gathering systems located in the Indiana, Valley, and Kiski divisions. These locations

were chosen as the initial mitigation areas because they were identified by local personnel as

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having a higher proportion of leak prone pipeline segments. These work crews will be solely

dedicated to finding and repairing leaks on an accelerated basis.

As the segmentation data identifies specific locations, the Companies also plan to hire

additional employees to increase the number of dedicated crews to address additional

gathering lines on the Peoples Gas and Peoples Natural systems. Following this 2018 ramp-up

and transition period, the Companies expect to achieve the goal of annual survey all bare steel

gathering pipelines in 2019. This will allow the Companies to find, track, prioritize and more

quickly repair gathering system leaks.

GATHERING PIPELINE IMPROVEMENT STRATEGY-HIGHEST VALUE ACTIVITY

As of December 2017, the Peoples Companies have 4,268 miles of at-risk pipeline, more

than other Pennsylvania natural gas distribution company ("NGDC"). At-risk pipeline miles by

Company/Division are as follows:

Miles of At-Risk PipelineDistributionTH Gatheringf2l Total

Peoples Division 1,817 403 2,220Equitable Division 749 559 1,308Peoples Gas 480 260 740TOTAL 3,046 1,222 4,268

[1] Includes distribution, transmission and storage pipe - as reported in the Combined Distribution LTIIP.

[2] Determined by primary function. For Peoples Gas only, the 260 miles of at risk Gathering pipelines are

currently included in Transmission for plant accounting purposes.

Unlike other Pennsylvania NGDCs, the Peoples Companies have a significant amount of

pipelines that primarily provide a gathering function. As a result, a significant percentage of the

Peoples Companies' at-risk pipelines, 29%, are gathering pipelines. Because the gathering

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pipelines generally have a lower density of customers and a lower risk ranking than distribution

system pipelines, the Peoples Companies are proposing different pipeline replacement plans

for distribution and gathering systems. The PUC-approved Combined Distribution LTIIP focuses

on the Peoples Companies' distribution and transmission systems. This UFG Plan focuses on

the Peoples Companies' gathering systems. The primary driver for separating the removal and

replacement of gathering from the removal and replacement of the remaining at-risk

distribution pipelines is that the gathering systems have the lowest risk and lowest density of

customers.

Why do the 'at-risk' gathering pipelines have generally lower risk scores? This is

primarily due to the lack of population around the pipe. Risk scores are determined by

multiplying risk of failure by the consequence of failure. Class Location, which is based on the

population around the pipeline, is evaluated in scoring the consequence of failure. To

demonstrate how significantly this impacts the risk scores we can look at the number of

customers served from these pipelines. As shown in the table below, as of December 2017

there are significantly more customers served by distribution at-risk pipe than served by

gathering at-risk pipe.

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Miles of Target MainsDistribution Gathering Total

Peoples Division 1,817 403 2,220Equitable Division 749 ; 559 1,308Peoples Gas 480 260 740

Total 3,046 1,222 4,268Percent of Total 71% 29%

Customers ImpactedDistribution Gathering Total

Peoples Division 131,328 ; 602 131,930Equitable Division 82,092 2,423 84,515Peoples Gas 9,094 199 9.293

Total 222,514 3,224 225,738Percent of Total 99% 1%

Customers oer MileDistribution Gathering

Peoples Division 72 1Equitable Division 110 4Peoples Gas 19 1

As the table shows, Distribution has 71 percent of the at-risk pipe and about 99 percent

of the customers served off of at risk pipe while Gathering has 29 percent of the at risk pipe and

only about one percent of the customers.

The lower customer per mile density on Gathering pipe (one customer per mile on

Peoples Division and Peoples Gas; four customers per mile on Equitable Division) reflects the

dual purpose of the Gathering systems. It would be economically inefficient for a NGDC to

install one mile of pipeline just to serve a single, average size, end use customer, or for that

matter, to serve four customers, so these lines were originally constructed to access new gas

supply. Attaching customers to these lines was generally incidental to obtaining supply. The

primary purpose of much of the Companies' gathering systems was to access shallow-well, low

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pressure, local gas supplies, which provided benefits to all of the Companies' customers and not

just those located along the gathering line.

Changes in the natural gas wholesale marketplace demand that the Peoples Companies

review and reconsider the use of and benefits from their gathering lines. Production of local

gas from deeper, high pressure, Marcellus Shale wells is booming while production from

traditional, low pressure, shallow wells is declining. Today, a single Marcellus Shale gas well can

produce the same amount of local gas as 100 or more traditional, low pressure shallow wells.

Because of its high volumes and high pressure, Marcellus gas cannot be received into the

Companies' distribution systems through the gathering systems that have traditionally received

and delivered shallow well local gas. As a result, the dual purpose that originally justified the

development of the Companies' gathering systems may no longer exist on some gathering lines

or, if it still exists, may not exist in sufficient scale or projected duration to justify a new capital

investment to replace the existing gathering line.

These considerations led the Companies to initiate an ongoing analysis of their

gathering systems to determine the current usage of gathering lines. The analysis segregates

the gathering lines into three groups on the basis of quantity of local production delivered into

the line and number of end use customers served directly off of the line. The miles of pipeline

falling into each group are shown in the following table. The green group represents gathering

lines that have both low production and no customers. The red group represents gathering

lines that are critical to transport gas to distribution areas that rely on local production to serve

customers. The yellow group represents everything in between. The category of gathering line

will help inform the type of infrastructure improvement or other action to be taken by the

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Companies. A green designation identifies a pipeline as a likely candidate for elimination

because there are no customers served along the line and there is little or no benefit from

continued receipt of production into the line. On the other hand, a red designation identifies a

pipeline as a likely candidate for replacement because there are numerous customers served

along the line and/or continued receipt of production into the line benefits the Companies and

their customers. A yellow designation identifies a pipeline as possessing mixed characteristics

that will require a further detailed analysis. The analysis will consider that the cost of replacing

at-risk pipe in the yellow category is in excess of $738 million.

The Companies used this initial analysis to guide the proposals in this UFG Plan and

concluded that the highest value improvement plan would focus in the initial years on

eliminating at-risk green pipelines from the system. The following table provides a breakdown

of the Peoples Companies' at-risk gathering pipeline into the three groups.

Gathering Miles of PipePNG PNG-ED PG TOTAL

Total Miles 752 788 533 2,073

At-Risk Miles 403 559 260 1,221Green - Eliminated/Abandoned 64 34 15 114

Red - Repaired/Replaced 58 87 39 184Yellow - Further Analysis Needed 281 437 205 923

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REMOVAL /REPLACEMENT OF AT-RISK GATHERING PIPELINES

Pursuant to this UFG Plan, the Peoples Companies will increase gathering line

investment over currently approved LTIIP gathering spending plans commencing in 2018. For

the 4-year period covered in this UFG Plan, the Peoples Companies will remove 115.2 miles of

at-risk pipeline, which will save over $90 million that would be spent if these lines were to be

replaced, and replace 20.0 miles by focusing on the red and green portions of the gathering

system. The table below shows the miles affected by year.

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COMBINED PEOPLES' UFG MITIGATION PLANActivity and Cost Data Related to the Removal and Replacement of Gathering Lines

January 1, 2018 through December 31, 2021

Gathering Lines - Miles Abandoned 2018 2019 2020 2021 TotalPeoples 2.8 6.2 16.0 38.4 63.4Peoples-Equitable 8.2 7.3 12.0 8.9 36.4Peoples Gas (TWP) 0.0 0.1 9.2 6.1 15.4

Total 11.0 13.6 37.2 53.4 115.2

Gathering Lines - Miles Reoaired/RenlacedPeoples 1.0 2.4 2.1 3.4 8.8Peoples-Equitable 0.0 0.0 1.6 0.8 2.5Peoples Gas (TWP) 0.2 0.5 4.0 4.0 8.7

Total 1.2 2.9 7.7 8.2 20.0

Gathering Lines (Abandoned)- SmillionsPeoples $ 0.16 $ 0.41 $ 0.74 S 0.69 $ 2.00Peoples-Equitable $ 0.34 $ 0.62 $ 0.39 $ 0.16 $ 1.51Peoples Gas (TWP) $ - $ 0.01 $ 0.12 $ 0.13 $ 0.26

Total $ 0.50 $ 1.04 $ 1.25 $ 0.98 $ 3.77

Gathering Lines (Reoaired/Reolaced) - SmillionsPeoples S 0.80 $ 2.00 $ 1.65 S 2.69 S 7.14Peoples-Equitable $ - $ - $ 1.35 S 0.66 S 2.01Peoples Gas (TWP) $ 0.20 $ 0.40 $ 3.20 S 3.20 $ 7.00

Total $ 1.00 $ 2.40 $ 6.20 $ 6.55 $ 16.15

Gathering Lines - TOTAL - SmillionsPeoples S 0.96 $ 2.41 S 2.39 $ 3.38 $ 9.14Peoples-Equitable $ 0.34 $ 0.62 $ 1.74 $ 0.82 $ 3.52Peoples Gas (TWP) $ 0.20 $ 0.41 $ 3.32 $ 3.33 S 7.26

Total $ 1.50 $ 3.44 $ 7.45 $ 7.53 S 19.92

Vehicles Tools EauiomentPeoples $ - $ 0.31 $ 0.44 $ - $ 0.75Peoples-Equitable $ - $ 0.14 $ 0.20 $ $ 0.34Peoples Gas (TWP) $ - $ 0.04 $ 0.06 $ - $ 0.10

Total $ $ 0.49 S 0.70 $ - $ 1.19

Total Gathering LTIIP - SmillionsPeoples S 0.96 $ 2.72 $ 2.83 S 3.38 $ 9.89Peoples-Equitable $ 0.34 $ 0.76 $ 1.94 $ 0.82 $ 3.86Peoples Gas (TWP) S 0.20 $ 0.45 $ 3.38 $ 3.33 S 7.36

Total $ 1.50 $ 3.93 $ 8.15 $ 7.53 S 21.11

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To achieve the results above requires an increase of $21.1 million in planned gathering

pipeline investment (inclusive of $1.2 million for additional vehicles, tools and equipment) for

the Peoples Companies in addition to the approved Combined Distribution LTIIP spending plans

of $919.4 million. The graph below shows the overall capital spend for this UFG Plan and

includes additional component described below:

10.0

9.0

8.0

7.0

6.0

5.0

4.0

3.0

2.0

1.0

UFG Mitigation Plan Capital Expenditures(SMillions)

■ Gathering Line Removal/Replacement

■ GMAS IT changes

■ Segmentation

■ TOS Progarm

□ Leak Repairs

■ Fleet/Tools

12 3 4

FURTHER ANALYSIS TO BE PERFORMED WITH RESPECTTO CERTAIN GATHERING PIPELINES

The Peoples Companies are also proposing to further analyze the "yellow" category of

gathering pipelines during the implementation of the initial removal/replacement activity.

These assets currently operate as independent gathering systems, a legacy of their former

ownership by separate NGDCs, even though many of the pipelines are within close proximity of

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one another. The analysis will focus on leveraging synergy opportunities between overlapping

pipelines, thus avoiding duplicative replacements of redundant, at-risk pipelines. In addition to

reducing total capital investment for pipeline replacement, this also presents opportunities to

optimize the overall operation of gathering facilities and thereby to reduce the impact on local

production and system supply while improving system reliability and lowering UFG and

operating costs. The Peoples Companies propose to provide an analysis and recommendations

for these pipeline segments in their 2020 1307(f) cases.

GATHERING PIPELINE ABANDONMENT CONSIDERATIONSAND COMMUNICATION

The first one and one half years of this plan will focus on eliminating/abandoning

targeted gathering pipelines that have no current production. Elimination of these lines will

avoid the cost of leak surveys and eliminate the possibility of flow from active production lines

into these lines and if check valves at the old wells are not working properly, the flow of gas

back into the old wells. Under this initiative neither the Companies' gas supply nor any local

producer will be impacted. During this period, the Peoples Companies will meet with producers

to inform them of the expected timing of the elimination of the remaining green low

production pipelines and potential impacts to their future production. The Peoples Companies

intend to collaborate with affected producers to explore potential solutions in an effort to

mitigate those impacts. Possible solutions may include the synergistic consolidation of producer

lines and meters for delivery at new points in the Peoples Companies' systems or transfer of

lines to inclined producers. Where Commission approval of such a transfer is required, the

Companies would file for and obtain such approval separate and apart from any approvals

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received of this UFG Plan. During this initial one and one half year period, the Companies will

also identify appropriate timing for elimination of each remaining green segment.

MAPPING ENHANCEMENTS

As an additional UFG identification tool, the Companies are developing an interactive

mapping system that merges real-time data obtained from the Companies' SCADA network

with system maps that reflect static pipeline pressure and volume information. The new maps

will lay real-time gathering pipeline pressure and volumes over historical, average pressures

and volumes on specific lines. A visual drop in pressure or a change in pressure or volumes

would indicate a potential issue to be investigated. The new mapping will allow the Companies

to respond quicker to any indicated issues and more efficiently utilize field resources.

GAS MEASUREMENT ENHANCEMENTS

The Companies will enhance the data management and control system to incorporate

new segmentation meters and utilize validation tools to produce more accurate measurement

data. A graphical interface will be utilized to help detect suspicious data or flow anomalies.

The system will trigger alarms, events and validation flags in a user-friendly manner.

Additional demarcation measurement points were installed within the last several years

which include new meters and flow computers. The flow computers, along with the meters,

require calibration to perform at optimum accuracy, a necessity to ensure line loss is accurate.

The combination of the above monitoring and reporting tools as well as additional

meter accuracy checks described above will provide a quicker view of changes that could

impact loss.

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UNAUTHORIZED USE OF GAS

The Companies currently have in place processes and procedures such as usage variance

reports to detect potential unauthorized use of gas situations such as theft of service ("TOS").

Field customer service personnel are also trained and tasked with identifying potential TOS

situations as part of their daily work routines. Should such a situation be identified, service

orders are created and issued for further investigation. If a TOS situation is verified, gas is

immediately shutoff to the premise, and the customer is billed for unauthorized usage and

prosecutorial actions may be taken.

The Companies are undertaking a review of existing TOS procedures designed to expand

and enhance their effectiveness. As part of this review, an internal TOS team was formed in

late 2017. The TOS team, which consists of cross functional company representatives, has been

charged with establishing a more formalized, consistent and expanded TOS program across all

operating divisions. Some possible program modifications and enhancements that have been

identified include:

• Implement processes to ensure that all forms of unauthorized use of service are

addressed. They include unauthorized turn-ons by customers, meter tampering,

unmetered by-pass service, and fraud and material misrepresentation by

customers;

• Establish a dedicated TOS staff responsible for theft detection and investigation

as well as enhanced and focused training of field service personnel;

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Improve customer information system capabilities to identify customer

consumption trends, flag possible aberrant usage situations, and automatically

report results indicating potential TOS.

• Enhance field observation techniques; set up a customer toll-free Gas Theft Tip

Line; implement public education and hot line advertisements; and

• Improve back office functions in support of work order management including

generation and assignment of TOS investigation work orders, corrective actions,

billing and reporting.

This program review is ongoing and is expected to result in more effective TOS back office and

field processes and procedures during 2018.

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