Confidential & Proprietary | Copyright © 2016Slide 1

The DSO – Two Visions – One Principle

Field of Dreams Ordo Ab Chao

“How do we get people to invest

in DER?”

“Build a market and rely on

greed”

“How do we get all the DER to

do what we want?”

“Build a market and rely on

greed”

Confidential & Proprietary | Copyright © 2016Slide 2

ISO – Different Starting Places - DSO

■ Generators were all in Place

• Participation Mandatory

■ Theory and Practice of

Scheduling (SCUC) and Dispatch

(EDC) and Control (AGC) well

known and proven

■ All we had to do was to change

“cost” to “price” in the SW

■ And it still cost $200M to build!• Participant Systems

• Bidding

• Settlements

• Altered CCC infrastructure

• Tariffs & Lawyers

■ Trials and Tribulations (mostly)

hidden from public view

■ Stranded Cost Recovery part of

the “Deal”

■ The DER is mostly not there yet

(HA and CA notwithstanding)

• Participation better be Voluntary

• “Obamacare of Energy?”

■ Theory and Practice of Distribution

Scheduling and Dispatch all NEW

■ Cost – Benefit Analyses Largely

Missing

■ How to Fund?

• Addition to “D” tariff?

• Transaction Fee (when no

transactors as yet?)

■ Trials and Tribulations will be

VERY Close to Home

■ Whose Costs will be Stranded?

• Existing merchant generators?

Confidential & Proprietary | Copyright © 2016Slide 3

ISO - What is Cost? Who Pays? - DSO

■ $5B Wholesale Market

■ $40/MWH average price

■ $0.30 Grid Fee

• 0.75% fee

• $375M ISO budget

■ 125 TWH in market

■ 100 “Products” in Market

■ 800,000 annual transactions

• Average transaction is $6250

• Small ancillaries to large energy

■ Transaction Cost = $46.50

(0.75%)

■ $1B Retail Market (1 IOU)

■ $0.20 kWH retail price

■ Average “Transaction” is:

• 5kwH - $1.00 (you pick)

■ Grid Fee of 1% would be

• a PENNY !

■ Assume 33% “participation”

• = 33% RPS achieved ?

■ DSO “Budget” = 1% x 33% x $1B

= $33M / yr.

• BUT - # of products << 100?

• # of transactions smaller pro rata?

• At beginning with 5% participation

– DSO requires $32M / yr subsidy

Confidential & Proprietary | Copyright © 2016Slide 4

Who Performs the DSO?

■ ISO

• Non-profit independent entity

• Answerable to FERC and

stakeholders

■ DSO

• Utility

Firewalled from non-reg

activities?

• Independent operator

• Multiple “platform” operators

• Aggregators

■ Answerable to State

Commission?

• Role of FERC wrt wholesale

Confidential & Proprietary | Copyright © 2016Slide 5

“From Chaos Comes Clarity”

1

We have the

energyto make things work

… for you.

PSE&GJorge L. CardenasV I C E P R E S I D E N T A S S E T

M A N A G E M E N T A N D C E N T R A L I Z E D

S E R V I C E S

3

Serving New Jersey for 112 Years

PSE&G Service Territory

• 323 Municipalities

• 70% of New Jersey’s

population

• 1.8 million Gas customers

• 2.2 million Electric customers

4

We make things work for you

Vision:

Being a recognized leader for:

People providing Safe, reliable Economic and Green Energy

5

PSE&G is New Jersey’s largest electric and gas

distribution and transmission utility

Update

Electric Gas

CustomersGrowth (2010 – 2014)

2.2 Million

0.4%

1.8 Million

0.4%

2014 Electric Sales and Gas Sold and Transported 41,715 GWh2,523M

Therms

Projected Annual Load Growth (2015 – 2017)** 0.2% 0.3%

Projected Annual Load Growth

Transmission (2015 – 2017)0.7%

Sales Mix

Residential 33% 59%

Commercial 57% 37%

Industrial 10% 4%

Transmission Electric Gas

Approved Rate of Return*** 11.68% ROE 10.3% ROE 10.3% ROE

Renewables & Energy

Efficiency Approved Programs2009-June 2015

Total Program

Plan

Total

Investment thru June 2015

Solar Loan Capacity 86MW 178.5 MW $252M

Solar 4 All Capacity 114 MW 125 MW $566M

EE Annual Electric savings 214 GWh ~250 GWh$337M

EE Annual Gas savings ~7M Therms ~10 M Therms

6

The Changing Landscape

6

Transmission Distribution

An integrated approach to implementing both Asset and Service Offering Strategies will

ensure that PSE&G holistically understands how it will maintain grid reliability while

growing the business proactively to increase shareholder value.

PV SolarMicroGrids

CHP

Plug-in HybridEnergy

Efficiency

Solar Farms

Storage

Fuel Cells

Wind

Demand Response

All Time 2006 11,108

2015 10,300

PSE&G Peak

Solar 700

Demand Response 230

Energy Efficiency 200

Microgrids

Princeton 18

Hoboken 70

NJ Transit 130

Total ~1,350

Observed/Potential Peak Reductions

7

Strategic Implications of the Changing Landscape

There are a number of possible impacts, but the three main impacts could be:

●Lower revenues from existing customer base due to lower volumetric usage

●Lower investment opportunities

●Operational Challenges to both the transmission and distribution grid because of intermittent/non-dispatchable DER.

Given these impacts:

●Are we ready?

●Do we have a cohesive strategy to participate and succeed?

●Have we identified our gaps and have plans in place to close them and succeed?

8

Challenges to maintaining Operational Excellence/Grid ReliabilityIntroduction of electric disturbances to the grid

● Early Solar Installations were an example of challenges to maintaining reliability leading to a requirement

to cap installations on a circuit

Distributed Energy Resources (DER) at the Distribution level will eventually impact the Transmission Grid

● Transmission and Distribution Planning and Operations have to have visibility of the DER resources on

the grid

Geographic location of DER presents an opportunity to defer future capital investment

● Potential to tailor service offerings and pricing to encourage participation in locations that would improve

reliability and defer unnecessary capital expenditures

Real-time modelling and forecasting of weather impacts on Solar and Storage and Fuel Cell to ensure

system stability

● Sustained cloud cover or record-low temperatures could impact DER generators ability to produce

electricity requiring grid operators to ensure sustained reliability

Embracing and shaping the future to ensure that PSE&G is seen as an enabler versus an obstructionist

● Making grid “Plug and Play” viable and a reality

9

One Model May Be:As a new distribution model for utilities is shaped, strategic choices

will be necessary to capitalize on the opportunities

9

Beyond the Meter

Services

Information Services

Distributed Energy

Production Services

Intelligent Grid

Operator

Pure-play transport

(Current State)

Distribution Platform

Integrator

“Obligation

to Serve”

“Commitment

to Optimize”

Energy

Services

Commodity

Delivery

The collaboration between Energy Services, Asset Management and Operations will

enable PSE&G to plan properly in an integrated manner to optimize outcomes in both

commodity delivery and energy services.

10

ENERGY STRONG

ADVANCED TECHNOLOGIES Contingency Reconfiguration

Relay/SCADA Construction

D-SCADA / ADMS

11

Contingency Reconfiguration ($100M)

• Focus on Priority Customers

– Hospitals, Infrastructure, Government, First responders

• Minimize outages and increase restoration options

– Increase sections on 13kV loops

– Increased use of branch reclosers to isolate outages

– Increase tie points between circuits

• Projects

– 161 Projects Completed Statewide

– Impacting 191 Critical Facilities

– 65 Projects On-Going

– Over 388,000 Ancillary Customer Benefits

– Will remediate 262 Critical Facilities by Program End

– Approx. $70 Million Spent to Date

12

Program To Date

800 relays replaced

37 RTU’s installed

70 stations in-service

Approx. $78 Million Spent

Approx. 985,000 customers benefited

Plan Through 11/30/2016

930 relays replaced

42 RTU’s installed

95 stations in-service

Approx. $94 Million Spent

Approx. 1,203,000 customers benefited

Plan Through May 2017

1200 relays replaced

50 RTU’s installed

112 stations in-service

Approx. $105 Million Spent *

Approx. 1,415,000 customers benefited

Advanced Technologies ($100M)Relay/SCADA Construction

Program challenges:

Coordinating outages with other planned work

Coordinating with IT to get necessary Station Communications setup ahead of project work

Difficulty getting distribution outages during sustained hot weather

* Transferred

$5M from CR

to AT

13

Advanced Technologies–DSCADA Today

14

Advanced Technologies–DSCADA Future

Replacing the existing four independent DSCADA systems with a centralized and shared

Master Station enhances the available information with respect to the operation of the

electric distribution system and storm restoration processes

15

Advanced Distribution Management System (ADMS)

In Service June 2018

Master Storm Center Map

The ADMS allows us to merge Operational SCADA data with the Storm Damage Assessment Data to create a single geographical view

The merging of these two Major data sources into a geographic Master View provides

an insight and understanding that is impossible to achieve with legacy technology

16

SOLAR Projects

Brown Field

Storage

17

The PSE&G Solar 4 All® Program will provide 125 megawatts-dc

(MW-dc) of grid connected solar power by the end of 2016

40MW-dc pole attached solar

52.5 MW-dc landfill/brownfield solar

29.5MW-dc centralized solar

3 MW-dc solar pilot projects

Additional 734MW-dc of solar installed in PSE&G electric service territory

18

Solar 4 All – 3 MW-dc Solar Pilot Program

Integrate solar with other technologies to reduce the impact solar has on the grid

or demonstrate reliability and grid resiliency for critical facilities during prolonged

outages.

Project at Hopewell Valley Central High School transforms school into a solar/battery powered warming station during extended outages.

Project at Cooper University Hospital in Camden will create a solar/battery powered system to help preserve vital pediatric medications during extended outages.

Project at a wastewater treatment facility in northern New Jersey will allow continued operations during outages.

19

MICROGRIDDesign

Integration

Projects

20

Optimal Microgrid Design

Several key assumptions include:

•Utility infrastructure will not be used

•There will be minimal (preferably zero) impact on Utility system

operations

• Export significantly increase cost and complexity

•Public Right-of-way (ROW) facilities a regulatory/operational

challenge

• Who owns and maintains

• Ideally all cabling between sites will be installed under streets

•Public-private partnerships will be needed

• Financial responsibilities for capital, maintenance, and operations

• Agreements on liabilities

21

Microgrid Integration

• Utility Grid

• Export power key consideration

• Customer Load

• Customer Generation:

• Solar/ Photovoltaic (PV)

• Combined Heat and Power (CHP)

• Energy Storage

• Coordinated Protection with utility and microgrid

22

Microgrid Projects within the PSE&G franchise

The utility interface needs protection to ensure the generator integrates with the grid:

• Princeton (26kV customer): Ideal campus setting where the customer owns all the service side equipment

• NJ Transit(230kV customer): Challenging in that their load spikes

Separate and New infrastructure requirements:

• Hoboken - various locations. The most difficult since the existing utility infrastructure cannot be used (different circuits, loads from other customers, projection costs).

23

SMART CITIESConcept

Opportunity

24

PSE&G’s Smart cities initiative

Smart Cities is: Interconnectivity of products and programs via the Internet of Things (IoT) that

enables municipalities to use data to improve services and create revenue

streams.

Potential offerings: Smart Parking, Pedestrian and Traffic counting and coordination, Intelligent

LED banners, environmental sensors

PSE&G has reached out to our Municipal partners to gauge

interest in Smart Cities implementation throughout the State

Exploring 3 options for potential Pilot Projects Full offering of integrated Smart Cities network with API solutions that includes

sustainability programs

Limited Utility offering of select offerings (i.e. Smart parking, LED banners, etc.)

Offer network to municipalities to utilize through acquisition of business

partnerships with IoT developers

P S E G C O N F I D E N T I A L

25

Smart cities pole

Exelon: An integrated Utility and Generation company for the Future

How New York is leading the way

Jeffrey Yuknis

Vice President, Exelon

2

Exelon: An Industry Leader

Note: All numbers reflect year-end 2015; 2015 revenue number is Exelon and PHI combined

3

Exelon Utilities Overview

Note: Rate base number is Exelon and PHI combined and denotes year-end

4

Exelon Generation Overview

5

New York recognizes carbon emission free Nuclear power is a bridge to its clean energy future

Source: January 5, 2015 Response to the IL General Assembly Concerning House Resolution 1146 prepared by Illinois Commerce Commission, Illinois Power Agency, Illinois Environmental Protection

Agency, and Illinois Department of Commerce and Economic Opportunity; New York’s Upstate Nuclear Power Plant’s Contribution to the State Economy, Mark Berkman and Dean Murphy (The Brattle

Group) authors, December 2015

6

Driving Forces Complicating Factors

• Extreme weather events

• Aging infrastructure/Inefficiency of

system

• Political will

• Customers demand for new and

innovative products/services,

increased resiliency and reliability

• Capital costs of Distributed Energy and

Microgrids

• Distributed Energy interaction with bulk

power system

• Tariff structure allows for single

microgrid customers (“campus”) but

does not support aggregation of

potential customers (“community”)

• Standby rates for existing infrastructure

New York recognizes desire for Distributed Energy Resources/Microgrid Innovation and Challenges to Integration

7

NY Initiatives pursuing Distributed Energy : Addressing Regulation leads to Innovative 3rd Party Opportunity

REV

Demonstration

Projects

Value of D

• ConEd Brooklyn/Queens Demand

Management Program

• Southfork RFP

• Java Substation RFP

• Station 43 RFP

Non Wires

Alternative RFPs

“REV”

Initiatives

Addressing

Complicating

Factors

NY Prize – Phase

1 & 2 underway

Standardized

Interconnection

Reforms

Standardized

Cost Benefit

Methodology

8

Exelon in Entrepreneurial Partnership with Anbaric pursuing 3rd Party Investment in New York Community Microgrids• Exelon, in partnership with Anbaric, is pursuing Microgrid Development Opportunities in New York

• Focus on Third Party Microgrids in the Commercial Real Estate, Public Buildings, Municipal Utility, Industrial Facilities

and Hospital Campus space.

• Participating in the NY Prize Projects competition

• Participating in Non Wire Alternative (“NWA”) RFPs

• The Exelon-Anbaric approach focuses on community style microgrids integrating diverse components:

Distributed

Generation (DG)

Distribution

and Interconnection (D&I)

CHP

Solar

Fuel Cells

Electric and

Thermal

Storage

BMS Integration

DR Interface

HVAC / Lighting Efficiency

Power Quality Management

“Low Power Mode”

Grid Interconnection

Electronics

Automated Switching

Sensors & Controls

Electrical / Thermal Loops

Volt-VAR Management

Islanding Function

Flood Protection

Energy Management (EM)

Building

Efficiency (BE)

Real time Microgrid vs. Grid Dispatch

Real time Microgrid vs. Grid Transactions

Optimized Procurement and Trading

Billing and Consumption Analysis Platform

Getting the Price Right to Attract

Distributed Energy Resources

Stephen Wemple

September 15, 2016

Agenda

2

• Overview of REV Proceeding

• BCA Order and Implementation

2

3

NYPSC’s vision and policy goals

3

Overview

Stated Objectives

• Enhanced customer

knowledge and tools

to support

management of the

total energy bill

• Market animation and

leverage of customer

contributions

• System wide efficiency

• Fuel and resource

diversity

• System reliability and

resiliency

• Reduction of carbon

emissions

What does REV mean in utility operations

Overview

• Generation becomes

more flexible

• Loads become more

interactive and

dynamic

• Greater penetration

of distributed energy

resources

• Grid becomes

smarter all the way

up to and including

the meter

• Empowered

customers become

energy producers

Power Flow

4

5

Benefit/Cost Analysis (BCA)

June 30, 2016 filing of utility BCA Handbooks for evaluating utility projects and DER

• Applies to any utility “investment that

could be met through DER alternatives”

• Societal Cost Test (SCT) is principle

project selection tool; analysis to include:

• Wholesale energy benefits (that

DER owner will realize)

• Distribution benefits

• Full1 carbon value (~$20 / MWh)

• Narrow “safety valve” for projects that

raise distribution bill (e.g. requires

assessment that bill impact is not

acceptable)

Carbon

Lower DER-

owner supply

bills

+

1 EPA cost of carbon5

7

6

Applicability of Benefits to DER

Benefits Applicable

to DERsNot Applicable

Potential Future

Application

ICAP – from DPS study

LMP – from NYISO CARISTransmission Losses –

already in LMP

Distribution Losses – used to

gross up LBMP

Avoided Pollutants – already

in LBMP

Ancillaries – NYISO prices for

DER participating in markets

Water & Land Impacts –

qualitative assessment

Avoided GHG – Staff’s calculation

of social cost of carbon, net of

RGGI

Net Non-Energy Costs – not

required initially

Transmission & Distribution –

Utility marginal cost study

Avoided O&M – already in

marginal cost studies

Distribution Level Ancillaries –

if reactive control of DER is cost-

effective

Restoration & Outage Costs – if

DER improves reliability / allows

customer to operate independently

8

Locational Value of DER

Load relief from DER resources can rapidly dissipate within a network system

• Nature of the meshed network:

DERs must be surgically placed near

the constrained component to prove

effective

• Multiplying effect: the farther the DERs are

located, the more DER KWs are needed to provide

equivalent load support

• More distributed, less efficient: placing smaller

amounts of DER at multiple node points will require

even more KW than shown above

Example modeling result1

Overload:

63 kW

Nodal Distance

1Network case study in forthcoming EPRI report

7

8

Locational Value of DER

ILLUSTRATIVE

Hypothetical LMP + D + E payments

cents/kWh

1 42 3

Value of D Value of ELMPHypothetical system constraint

Rooftop PV system

Hypothetical system constraints and rooftop

PV systems in CECONY NYC service area

4

1

2

3

#

8

September, 2016

Grid of the Future –

Planning and Operation

Outline

• Grid of the Future (GoF) Overview

• Planning and Operating the GoF – ComEd’s Approach

• Concluding Remarks

2

Our Customers:

• 3.9 million customers in northern Illinois

Our Company:

• One of four utilities owned by Exelon

• Exelon also own generation and energy

sales businesses

• ~6,000 Employees

• Service Territory: 11,428 square miles

Our Grid:

• Peak Load: 23,753 MW (7/20/2011)

• 526,000 distribution transformers

• 65,000 circuit miles of primary distribution

• 53% overhead, 47% underground

• 5,800 circuit miles of transmission

3

ComEd, An Exelon Company

Chicago

Illinois

3

Trends and Drivers

1

Climate

Change is

requiring

action

• Clean energy

legislation

(renewables, EE)

• Increase in

weather related

outages

3

Customers

are becoming

Increasingly

Digital

• Customer

segments of “one”

• Pervasive

Connectivity

2Technology

innovation is

accelerating

• Installation base of

solar is growing

• Costs of

solar/storage are

declining

Clean

Lean

Decentralized

Communal

With new

participants

4

Utilities are facing new and significant uncertainties and challenges driven by climate change, regulatory

pressures, a rapidly changing technological and business environment and increasing customer expectations

for reliable and quality power

In October 2011, the Illinois General Assembly enacted the Energy Infrastructure Modernization Act (EIMA),

setting in motion a $2.6 billion, ten-year investment by ComEd to strengthen and modernize the state’s

electric grid

Energy Infrastructure Modernization Act (EIMA)

• Investment Plan had two primary components:

1. Reliability-Related Investments – $1.3B over 5 years, cable

replacement, manhole refurbishment program, storm

hardening program, wood poles program, and building two

training centers

2. Smart Grid-Related Investments – $1.3B over 10 years,

distribution automation, intelligent substations, smart meters,

and cyber secure communication network

Invest in Illinois • $1.3B in system upgrades

• $1.3B in smart grid

• 2,000 full time jobs

• ISEIF

• Smart Grid Test Bed

• $50M for customer assistance

• Increased diverse supply chain

Stabilize the Regulatory

Environment • Annual filing and reconciliation

• Legislative pre approval of partial

investment

• ROE set by formula of 30Y T-bond + 580

bps

• ± 50 bps earned ROE collar

• Regulatory asset treatment 1 X items

>$10M

Customer Value • Reliability improvement targets

• Customer service improvement

targets

• Failure to meet targets = ROE

penalties

• Legislation sunsets in 2019

• Costs flow for bill credits/ increases

• Average rates increase < 2.5%

Next Generation Energy Plan (NGEP)

Double energy efficiency

$4 billion in energy savings

$1 billion of low-income

assistance

Enable solar with rebates

and > $100 million in new

funding

Enhance grid security

and reliability

Support at risk nuclear plants

through a

Zero Emission Standard

Reduce fixed charges

by 50%, giving customers

more control

Strengthen and expand

RPS for stable, predictable

funding

$

The Next Generation Energy Plan (NGEP) was proposed in March of 2016 to the Illinois General

Assembly. The bill features provisions for energy efficiency, low income assistance, rate structure

changes, distributed generation, enhanced grid resiliency, reliability and microgrids among others.

6

Utility Platform Based Model

UTILITY

PLATFORM

Home appliancesData services

Connected devicesEnergy transactions

Pre-provisioned DR enrollment

Community solar

FinancingDER offerings

Home servicesSMB programs

7

Transitioning the Grid

Grid advancement programs will focus on building resiliency and reliability into the physical system,

maintaining and improving asset health of our already existing smart grid infrastructure, and building

additional functionality and added value by leveraging our current asset base.

8

The NGEP would allow ComEd to invest up to $250 million in the development of five public purpose

microgrids within its service territory

Illinois Medical District

• Supports the major

health care facilities that

provide services to a

large number of people

within ComEd service

territory.

Bronzeville Community

• Provides a

representative cross-

section of the City of

Chicago. Includes a

diverse mixture of

facilities and critical

loads:

Chicago Heights Water

• Provides resiliency and

supports water

infrastructure for the

southern suburbs of

Chicago.

DuPage County Complex

• Provides resilient power

supply to support critical

operations of a major

county

Rockford Airport

• Support critical facility for

cargo and transportation.

Disruption to operations

may have major impacts

on the Illinois economy

ComEd utilized a holistic data driven approach and developed a resiliency metric to evaluate its entire service

territory for microgrid pilot installation locations.

For analysis, the service territory was

divided into one-mile by one-mile

sections outside the city of Chicago

and into half-mile by half-mile sections

inside the city of Chicago. Each

section was then analyzed with a

resiliency metric

Microgrid Pilot Program9

DOE Supported Grid Advancement

Microgrid Controller

The DOE awarded approximately $1.2 million to ComEd and it’s partners to develop and test a

commercial-grade microgrid controller capable of managing two or more clustered microgrids.

SHINES/MISST

The DOE awarded $4 M to ComEd to utilize smart inverters for solar PV and battery storage systems

Proposed MISST project will deploy high power solar PV and a high-power Battery Energy Storage

System (BESS) in the Bronzeville Community Microgrid (BCM).

Bronzeville Community Microgrid

10

Industry Leading Efforts

Feeder Simulation

Clustering Analysis

Feeder Models

Feeder Data

Constraint Values

# Clusters

Feeder Loading

Data

Re

pre

sen

tati

ve

Fe

ed

ers

Whole-of-network Analysis

Feeder Classification

System Hosting Capacity

Ho

sting

Ca

pa

city

Kernel Density

Estimation

(KDE)

Hosting Capacity =

Hosting Capacity PDF and CDF

Feeder Simulation Results

Characteristic FeedersClustering Example

ComEd is working to develop metrics and modelling

techniques which can be used to provide high confidence

screening of DER interconnection requests. One technique

is Hosting Capacity. Hosting Capacity seeks to measure

the amount of DG that can be accommodated by a feeder

without negatively impacting feeder reliability and power

quality

11

Motivated by the evolving roles and functions of the

distribution grid, the Distribution System Operator (DSO)

model calls for the transformation of the electric utility

business from a service provider (KWh sales) to a grid

and market operator

Hosting Capacity

Distribution System Operator (DSO)

Concluding Remarks

• Three key trends driving the Utility of the Future:

• Climate change

• Technology innovation

• Digitization of customers

• The power delivery system is shifting from today’s pipeline to a platform architecture, the (business

architecture of the 21st Century). This is characterized by:

• Advancement of the physical infrastructure

• Software tools, analytics and supporting enhancements

• Added services (platform model)

• Investment in pilots and demonstration projects is needed to modernize and advance the future

electric grid, and to realize the value provided by emerging technologies for our customers.

• Advanced modeling techniques and data analytics will be required to accurately measure and

manage the dynamic state of the electric system.

• Close collaboration between stakeholders including academia, national labs, regulators, and utilities

is a critical component of efficient innovation systems.

12

SAFE, RELIABLE NATURAL GAS AT OUR

CORE … AND SO MUCH MORE

September 16, 2016

Utility of the Future

Perspective

• Persistent long term drivers create a more distributed energy future:

- Federal, state, local policy support low carbon alternatives

- Consumers want cost-effective, clean, resilient, easy to use, “cool” solutions - Digital and Demand Energy Resource (DER) technology innovations are getting better, faster, cheaper and gaining share

• This is evolution not revolution, as traditional and new models need to work together, with utilities playing an essential ongoing role

• Current regulatory model primarily incents utilities to invest in supply and protect energy sales volumes

• The “Utility of Future” needs a regulatory model which aligns utility and consumer interests in DER, and stimulates new business opportunities along value chain

• Must be a collaborative process reflecting the complexity, diverse expertise, and stakes involved

9/16/2016

Regulatory Building Blocks

• Change rate structures with more precision by location, time and customer segment

• Adopt standard methodology to value DER including avoided utility costs and societal/environmental externalities

• Incorporate DER into distribution system planning

• Encourage demonstration projects for new technologies, regulatory models and non-wires alternatives

• Consider decoupling along with new energy efficiency programs

• Adopt performance based incentives structures with earnings impact linked to policy targets

• Open access to base level customer and system data

• Encourage utilities to offer new value-added services and invest in projects which support DER growth and modernize the grid

9/16/2016

Thank You

Larry Barth

Director Corporate Strategy

New Jersey Resources

1415 Wyckoff Road

Wall, NJ

732-919-8040 (o)

973-464-2874 ©

lbarth@njresources.com

10/12/2016