PECO STATEMENT NO. 4 BEFORE THE PENNSYLVANIA …15 unbundled rates effective June 1, 2006 from PGC...

PECO STATEMENT NO. 4

BEFORE THE

PENNSYLVANIA PUBLIC UTILITY COMMISSION

PaPUC v

PECO Energy Company

Docket No. R-00061501

DIRECT TESTIMONY

OF

ANTHONY P. DiFELICE

1 DIRECT TESTIMONY OF ANTHONY P. DiFELICE 2 3 4 Q. Please state your name and business address.

5 A. Anthony P. DiFelice, 2301 Market Street, Philadelphia, PA 19101.

6

7 Q. By whom are you employed and in what capacity?

8 A. I am employed by PECO, an Exelon Company ("PECO" or the "Company"). I am a Senior

9 Engineer in the Rates and Regulatory Division.

10

11 Q. Please describe your educational background.

12 A. I graduated from the University of Pennsylvania in 1981 with a Bachelor of Applied

13 Science Degree from the School of Engineering and Applied Science. I obtained a Master

14 of Business Administration Degree with a concentration in finance from Drexel University

15 in 1989.

16

17 Q. Please describe your employment history with PECO.

18 A. I began working for PECO in January of 1982. Since that time I have been employed in the

19 rates area of the Company, currently known as "Rates and Regulatory". Among other

20 responsibilities, my duties include the calculation of the rate for the Purchased Gas Cost

21 ("PGC")-

22

23 Q. Have you previously submitted testimony in rate proceedings?

24 A. Yes. I submitted testimony for the Company in the PGC No. 18 proceeding at Docket No.

25 R-00016366, the PGC No. 19 proceeding at Docket No. R-00027391, the PGC No. 20

26 proceeding at Docket No. R-00038409, the PGC No. 21 proceeding at Docket No. R-

27 00049423 and the PGC No. 22 proceeding at Docket No. R-00050537.

28

29 Q. Mr. DiFelice, what is the purpose of your testimony?

30 A. My testimony will describe and support the development of the PGC rates filed by the

31 Company in this proceeding for PGC No. 23 to become effective December 1, 2006.

1 Pursuant to the Company's Gas Restructuring Settlement, filed and approved at Docket No.

2 R-00994787, the PGC rate is unbundled into the Sales Service Cost (SSC) and the

3 Balancing Service Cost (BSC). The SSC is a charge to those customers purchasing gas

4 supply from PECO. The BSC recovers those costs associated with the operations of

5 contract storage facilities and PECO's peaking services from all of PECO's low volume

6 customers, whether or not they purchase their gas supply from PECO or a competitive

7 natural gas supplier. Low volume customers are defined as customers taking service under

8 Rate Schedules GR, CAP, GC, OL, L, MV-F and the Excess Off-Peak Use Rider.

9

10 My testimony also will describe the new firm and interruptible supply reservation charges

11 for Rate CGS (City Gate Sales Service) and the monthly demand charge for Rate TS

12 standby sales service to be effective December 1, 2006.

13

14 Q. Please identify the statements you are sponsoring in this proceeding.

15 A. I am sponsoring the following statements:

16

17 • Statement No. 1 is a table comparing the Company's current PGC No. 22-Q2 rates

18 effective June 1, 2006 with the proposed PGC No. 23 rates.

19 • Statement No. 2 summarizes the computation of the PGC No. 23 SSC.

20 • Statement No. 3 summarizes the computation of the PGC No. 23 BSC.

21

22

23 Also attached to my testimony as Exhibit APD-1 are the following proposed tariff pages

24 including the "redlined" version:

25 • Supplement No. 59 to PaPUC Gas Tariff No. 2, 55th revised Page No. 1 and 55th

26 revised Page No. 1A.

27 • Supplement No. 59 to PaPUC Gas Tariff No. 2, 22nd revised Page No. 34 and

28 22nd revised Page No. 37, reflecting the $0.2659 per mcf total decrease in the

29 1307(f) rates.

1 • Supplement No. 59 to PaPUC Gas Tariff No. 2, 9th revised Page No. 35, the

2 revision to the Off System Sales Sharing Mechanism for the period April 1, 2007

3 through March 31, 2009 described by Company witness Eric G. Helt.

4 • Supplement No. 59 to PaPUC Gas Tariff No. 2, 12th Revised Page No. 60,

5 showing new charges for the Firm and Interruptible Supply Reservation Charges for

6 Rate CGS (City Gate Sales Service).

7

8 Q. Please identify the specific time periods relevant to this filing.

9 A. The "historic period" (December 1,2005 through April 30, 2006) and the "estimated

10 period" (May 1, 2006 through November 30, 2006) together comprise the "E" factor

11 period. The "C" factor period, or PGC No. 23 application period, begins December 1, 2006

12 and ends November 30, 2007.

13

14 Q. Did you prepare Statements 1,2 and 3 identified above?

15 A. Yes, although the purchased gas cost fuel data from the Company's April 2006 Annual

16 Filing is sponsored by Company witness Eric G. Helt, who is submitting PECO Statement

17 No. 5.

18

19 Q. Please summarize how the Company recovers its projected cost of purchased gas and

20 prior period over/under collections through current rates.

21 A. As set forth in the tariff, the Company recovers the projected cost of purchased gas through

22 ' the Commodity Charge factor ofthe SSC and the "C" factor ofthe BSC. In addition,

23 amounts for prior period over/under collections, refunds, interest and other items are

24 recovered through the Gas Cost Adjustment Charge (GCA) of the SSC and the "E" factor

25 portion of the BSC. In total, under PGC No. 22, which was approved by the Commission

26 at Docket No. R-00050537, the Company began recovering $13.7250 per mcf as the

27 bundled SSC and BSC charges applicable to its retail sales service as of December 1, 2005.

28 That amount was further updated by a February 27, 2006 filing for PGC No. 22-Q1 that put

29 into effect, as of March 1, 2006, a PGC rate of $12.8267 per mcf, or a $0.8983 per mcf

30 decrease. Another update was made by a May 30, 2006 filing for PGC No. 22-Q2 that put

1 into effect, as of June 1, 2006, a PGC rate of $11.6892 per mcf, or a $1.1375 per mcf

2 decrease from the PGC No. 22-Q1 rate.

3

4 Q. Please describe the rates proposed in the PGC No. 23 filing.

5 A. For retail sales service, the calculated total cost of purchased gas ofthe SSC and BSC

6 factors is $11.4233 per mcf (Statement No. 1), or a $0.2659 per mcf decrease from PGC

7 No. 22-Q2. This rate is comprised of a $10.9904 per mcf charge for the SSC and a $0.4329

8 per mcf charge for the BSC.

9

10 Q. Please summarize the differences between the PGC No. 23 and the PGC No. 22-Q2

11 costs.

12 A. The CC component of the SSC is projected to increase by about 14%, from $9.7095 per

13 mcf in PGC No. 22-Q2 to $11.0260 per mcf in PGC No. 23. The GCA reconciliation

14 component ofthe SSC will decrease by 102% from $1.5245 per mcf in PGC No. 22-Q2 to

15 a credit value of $0.0356 per mcf in PGC No. 23. The BSC will decrease by $0.0223 per

16 mcf, from $0.4552 per mcf to $0.4329 per mcf.

17

18 Q. Please explain what caused the CC component of the SSC to increase from $9.7095

19 per mcf in PGC No. 22-Q2 to $11.0260 per mcf in PGC No. 23.

20 A. The $ 11.0260 per mcf value for PGC No. 23 is based on a projected recoverable fuel cost

21 of $646.8 million for the period December 1, 2006 through November 30, 2007 divided by

22 twelve month projected sales of 58,658,960 mcf for the same period. The calculation of the

23 $9.7095 per mcf value for PGC No. 22-Q2 reflects a combination of actual and projected

24 fuel and over/under collection data for the period December 1, 2005 through November 30,

25 2006, calculated in accordance with the PGC quarterly calculation methodology approved

26 in the Company's PGC No. 20 proceeding at Docket No. R-00038409.

27

28 Q. Please explain what caused the GCA rate to decrease from $1.5245 per mcf in PGC

29 No. 22-Q2 to a credit value of $0.0356 per mcf in PGC No. 23.

30 A. The $1.5601 per mcf decrease is due primarily to the change in the over/under collection

1 component for the Commodity Cost, from the S80.0 million undercollection balance at

2 December 1, 2005 reflected in the PGC No. 22-Q2 rate to a projected $1.3 million

3 overcollection balance at November 30, 2006 to be returned to customers during the PGC

4 No. 23 application period.

5

6 Q. Please explain what caused the BSC rate to decrease from $0.4552 per mcf in PGC

7 No. 22-Q2 to $0.4329 per mcf for PGC No. 23.

8 A. The decrease is primarily due to a reduction in the undercollection balance of $3.1 million

9 at December 1, 2005 to a projected undercollection balance of $1.5 million at November

10 30,2006.

11

12 Q. Please describe the information shown in Statement No. 1.

13 A. Statement No. 1 is a single sheet entitled "Proposed Changes in PGC Rate Prices Effective

14 December 1, 2006". This sheet consists of three columns, the first of which shows the

15 unbundled rates effective June 1, 2006 from PGC No. 22-Q2. The second column shows

16 the proposed changes to the present rates. The third column is the sum of Columns 1 and 2

17 and shows the proposed rates from Supplement No. 59 to Gas Tariff No. 2, to be effective

18 December 1,2006 from PGC No. 23. StatementNo. 1 shows a total decrease of $0.2659

19 per mcf between the proposed rates and the rates from PGC No. 22-Q2.

20

21 Q. Please describe the information shown in Statement No. 2, page 1 of the SSC.

22 A. Statement No. 2, page 1 summarizes the projected cost of gas and details the experienced

23 net overcollection ("E" factor or GCA). Page 1 shows the allocated projected commodity

24 cost of gas (CC) of $646,772,892 and summarizes the items used to develop the GCA

25 factor. This sheet shows a net amount for the GCA factor of $2.1 million in collections,

26 refunds and interest to be returned to customers during the PGC No. 23 application period.

27

28 Q. Please explain the basis of the $2.1 million net overcollection amount for the GCA

29 factor.

30 A. Four items determine the net amount as follows:

1

2

3 Iteml

4 Qver/CUnder) Collections (Statement No. 2, pages 2-4)

5 The recoverable cost of gas is subtracted from the CC revenues received (including the

6 adjustment for the prior period reconciliation). The resulting balance is the overcollection.

7 The estimated total overcollection after reconciliation is expected to be $1,319,308 as of

8 November 30, 2006 and that figure from page 2 is brought forward to page 1.

9

10 Item 2

11 Rate IS Profit (Statement No. 2. page 5)

12 The difference between revenues received and costs comprise "profit" from interruptible

13 sales ("IS") to regular customers and to Electric Operations. Seventy-five percent of these

14 profits are returned to PGC customers. The $121,431 in profits to be returned to SSC

15 customers is derived by reconciling prior refunds and calculating expected profits through

16 November 30, 2006.

17

18 Item 3

19 Net Interest on Item 1 (Statement No. 2, page 6)

20 The current period over/under collections for the SSC are determined monthly. The current

21 interest on these over/under collections is calculated by using an annual interest rate applied

22 to these over/under collections and is multiplied by a factor based on an equivalent payback

23 to the midpoint of the PGC No. 23 application period. The annual interest rate used is 6%

24 for current period undercollections and 8% for current period overcollections. The annual

25 time period used to determine the interest rate figure is April through the following March,

26 in accordance with the Commission's orders in the 2003 Purchased Gas Cost 1307(f)

27 proceedings for UGI Utilities, Inc. (Docket No. R-00038411) and PG Energy (Docket No.

28 R-00038410).

29

30 For the time period April 2005 through March 2006, the combined twelve month total of

6

1 the amounts in the "Current Over/(Under) Collection For Interest" columns in the SSC

2 (Statement No. 2, page 6) and BSC (Statement No. 3, page 6) results in an undercollection

3 for interest rate purposes of $53,543,843. This undercollection requires an interest rate of

4 6%.

5



8 (Statement No. 2, pages 6 and 11) and BSC (Statement No. 3, pages 6 and 10) results in a

9 projected overcollection of $8,655,277 for interest rate purposes, which requires an interest

10 rate of 8% on the over/undercollection balances for April 2006 through November 2006.

11 Actual interest and the actual interest rate for the period April 2006 through March 2007

12 will be reconciled in next year's PGC filing. Based on these interest rates, the current

13 interest for the period December 2005 through November 2006 to be returned to customers

14 during the PGC No. 23 application period amounts to $710,718.

15

16 In addition, the Company has an undercollection balance of $3,797,863 as of December 1,

17 2005 and estimates that it will recover $3,491,339 of the undercollection balance by

18 November 30, 2006 as shown on Statement 2, page 6. The total interest balance for the

19 GCA amounts to an estimated value of $404,194 to be returned during the PGC No. 23

20 application period.

21

22 Item 4

23 Supplier Refunds (Including Interest) (Statement No. 2, page 8)

24 This item is comprised of the actual refunds returned to the Company by suppliers after

25 July 1, 2001 plus interest calculated at six percent through the midpoint of the PGC No. 23

26 application period, less the amount expected to be returned to customers through November

27 30, 2006. The net result is an estimated amount to be returned to customers of $215,955 as

28 of November 30, 2006.

29

30 Q. Please describe the information shown in Statement No. 3, page 1 of the BSC.

1 A. Statement No. 3, page 1 of the BSC summarizes the projected cost that PECO will incur

2 under gas storage and peaking agreements with various interstate pipeline and gas

3 marketing companies and details the experienced net over/under collection. Page 1 shows

4 the projected costs for contract storage and peaking services and summarizes the items used

5 to develop the "E" factor. This sheet shows that the projected recoverable cost for the

6 contract storage and peaking services is $24.6 million for the period December 1, 2006

7 through November 30, 2007. The amount for the undercollection is $0.8 million on

8 November 30, 2006 comprised of collections, refiinds, interest and miscellaneous surcharge

9 monies to be recovered from customers during the PGC No. 23 application period. The net

10 amount to be recovered from customers is $25.4 million.

11

12 Q. Please explain the basis of the $25.4 million net amount to be recovered from

13 customers.

14 A. Five items determine the net amount as follows:

15

16 Iteml

17 The projected recoverable cost for the contract storage facilities and peaking services

18 amounts to $24,558,971 as shown on Statement No. 3, page 1.

19

20 Item 2

21 Over/fUnder) Collections (Statement No. 3, pages 2-4)

22 The recoverable cost of gas is subtracted from the BSC revenues received, including the

23 adjustment for the prior period reconciliation. The resulting balance is an undercollection.

24 The estimated total undercollection after reconciliation is expected to be $1,454,534 as of

25 November 30, 2006, and that figure from page 2 is brought forward to page 1.

26

27 Item 3

28 Miscellaneous Surcharge Monies (Statement No. 3 page 5)

29 Transportation balancing surcharge and penalties applied to transportation and Rates TCS

30 and IS customers are returned to firm customers through the BSC. After reconciling

8

1 refunds of prior balances and adding current surcharge monies, the balance to be returned is

2 expected to be $644,812 as of November 30, 2006.

3

4 Item 4

5 NeUnterest on Item 2 (Statement No. 3, page 6)

6 The current period over/under collections for the BSC are determined monthly. The current

7 interest on these over/under collections is calculated by using an annual interest rate applied

8 to these over/under collections and is multiplied by a factor based on an equivalent payback

9 to the midpoint of the PGC No. 23 application period. The annual interest rate used is 6%

10 for current period undercollections and 8% for current period overcollections. The annual

11 time period used to determine the interest rate figure is April through the following March

12 in accordance with the Commission's orders in the 2003 Purchased Gas Cost 1307(f)

13 proceedings for UGI Utilities, Inc. (Docket No. R-00038411) and PG Energy (Docket No.

14 R-00038410).

15



18 (Statement No. 2, page 6) and BSC (Statement No. 3, page 6) results in an undercollection

19 for interest rate purposes of $53,543,843. This undercollection requires an interest rate of

20 6%.

21



24 (Statement No. 2, pages 6 and 11) and BSC (Statement No. 3, pages 6 and 10) results in a

25 projected overcollection of $8,655,277 for interest rate purposes, which requires a projected

26 interest rate of 8% on the over/undercollection balances for April 2006 through November

27 2006. Actual interest and the actual interest rate for the period April 2006 through March

28 2007 will be reconciled in next year's PGC filing.

29

30 Combining the current interest to be returned to customers of $941 for the period December

1 2005 through November 2006 with the balance of prior period interest of $63,709 at

2 December 1, 2005 and the return to customers of $89,412 during the December 1, 2005

3 through November 30, 2006 period results in an estimated interest balance for the BSC of

4 $24,762 to be recovered from customers during the PGC No. 23 application period.

5

6 Items

7 Supplier Refunds (Including Interest) (Statement No. 3, page 71

8 This item is comprised of the actual refunds returned to the Company by suppliers on or

9 before July 1, 2001 plus interest calculated at six percent through the midpoint of the PGC

10 No. 23 application period, less the amount expected to be returned to customers through

11 November 30, 2006. This results in an estimated amount to be returned to customers of

12 $2,041 as of November 30, 2006.

13

14 Q. Does the Company propose to update the Firm and Interruptible Supply Reservation

15 Charges for Rate CGS (City Gate Sales Service) and the monthly demand charge for

16 Rate TS (Transportation Service) standby sales service?

17 A. Yes. As shown on Exhibit APD-1, effective December 1, 2006, the Rate CGS Firm Supply

18 Reservation Charge will be $14.33 per mcf per month. For the Interruptible Supply

19 Reservation Charge, and its applicable tariff provision (Tariff Gas-Pa. P.U.C. No. 2, page

20 61) specifying the use ofthe greater of (a) ten percent of the firm supply reservation charge,

21 or (b) the average revenue received per mcf per month under an interstate pipeline capacity

22 release/reassignment program during the most recent SSC actual period, the rates will be:

23 $/mcf/month

24 December 1 to February 28 $2.56

25 March 1 to May 31 $2.09

26 June 1 to August 31 $2.42

27 September 1 to November 30 $3.26

28

29 The monthly demand charge for Rate TS standby sales service will be $15.36 per mcf.

30

10

1 Q. Do you anticipate any updates of this filing?

2 A. Yes, we will update the filed information for actual data as the data becomes known.

3 Projected gas costs will be updated if the changes are significant.

4

5 Q. Does this conclude your direct testimony?

6 A. Yes.

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

11

Exhibit APD-1

Supplement No. 59 Gas-Pa. P.U.C. No. 2

PECO ENERGY COMPANY

GAS SERVICE TARIFF

COMPANY OFFICE LOCATION

2301 Market Street

Philadelphia, Pennsylvania 19101

For List of Communities Served, See Page 6.

Issued: June 1,2006 Effective: December 1, 2006

ISSUED BY: D. P. O'BRIEN - President PECO Energy Distribution Company

2301 MARKET STREET PHILADELPHIA, PA. 19101

NOTICE.

Supplement No. 59 To Gas-Pa. P.U.C. No. 2

Fifty Fifth Revised Page No. 1 PECO Energy Company Superseding Fifty Fourth Revised Page No. 1

TABLE OF CONTENTS Index of Communities Served ^ How to Use Loose-Leaf Tariff 3 Definition of Terms and Explanation of Abbreviations 4 RULES AND REGULATIONS:

1. The Gas Service Tariff 7 2. Service Specifications 8 3. Customer's Installation 9 4. Application for Service 10 5. Credit 11* 6. Service-Supply Facilities 121

7. Extensions. 125

8. Rights-of-Way 13 9. introduction of Service 13

10. Company Equipment on Customer's Premises 14 11. Tariff Options on Applications for Service 15 12. Service Continuity 16' 13. Customer's Use of Service 21 14. Measurement 21 15. Tests 22 16. Payment Terms 231

17. Termination by the Company 251

18. Unfulfilled Contracts 251

19. Cancellation by Customer. 26 20. General 26 21. Gas Choice Program Enrollment and/or Switching 27 22. Usage Data 27 23. Affiliated Marketer Standards of Conduct 28 24. Requests for Energy Efficiency Information 31 1

STATE TAX ADJUSTMENT CLAUSE 32a

UNIVERSAL SERVICE COST RECOVERY MECHANISM 33 SALES SERVICE COSTS - ("SSC") Section 1307(f) 34^ BALANCING SERVICE COSTS ("BSCL S?22

MIGRATION RIDER 391

TRANSITION SURCHARGE - SECTION 1307 (a) 40 1 2

CONSUMER EDUCATION CHARGE (CEC) 40A2

RATES: Rate GR General Service - Residential 41 5

Rate CAP Customer Assistance Program 421

Rate GC General Service - Commercial and Industrial 435

Rate OL Outdoor Lighting 445

Rate L Large High Load Factor Service 45e

Rate MV-F Motor Vehicle Service-Firm 465

Rate MV-I Motor Vehicle Service-lnterruptible 471

Rate IS Interruptible Sen/ice 49 Rate TCS Temperature Controlled Sen/ice 51 3

Gas Transportation Service - General Terms and Conditions 53 Rate TS-I Gas Transportation Service - Interruptible 582

Rate TS-F Gas Transportation Service-Firm Sg2

Rate CGS - City Gate Sales Service 60 1 2

Rate NGS - Negotiated Gas Service GIA1, 61B1

RIDERS: Applicability Index of Riders 62 Casualty Rider 63 Construction Rider 63 Excess Off-Peak Use Rider 647

Receivership Rider 65 Temporary Service Rider 65

Issued June 1, 2006 Effective December 1, 2006


Fifty Fifth Revised Page No. 1A PECO Energy Company Superseding Fifty Fourth Revised Page No. 1A

LIST OF CHANGES MADE BY THIS SUPPLEMENT

Sales Service Costs - (SSC) (22 n d Revised Page No. 34 and 9 t h Revised Pace No. 35 ) The Commodity Charge in this provision is increased. The Gas Cost Adjustment Charge is decreased. The Off-System Sales provision is extended through March 31, 2009.

Balancing Service Costs - (BSC) (22nd Revised Page No. 37) The Balancing Service Cost in this provision is decreased.

Rate CGS - Citv Gate Service - f 12 t h Revised Page No. 60) The Firm Supply Reservation Charge is decreased. The Interruptible Supply Reservation Charge is increased.

Issued June 1, 2006 Effective December 1. 2006


Twenty Second Revised Page No. 34 PECO Energy Company Superseding Twenty First Revised Page No. 34

SALES SERVICE COSTS (SSC) - Section 1307m

PROVISIONS FOR RECOVERY OF GAS COSTS RELATED TO SALES SERVICE

Rates for all Sales Service gas supplied under Rate Schedules GR, CAP, GC, OL, L and MV-F, and under the Excess Off-Peak Use Rider of this Tariff shall include the Commodity Charge (CC) at $11.0260 per Mcf {1,000 cubic (I) feet) for recovery of gas costs related to Sales Service, calculated in the manner set forth below, pursuant to Section 1307{f) of the Public Utility Code. In addition, the Gas Cost Adjustment Charge (GCA) in the amount of a credit value of $0.0356 per Mcf will be applicable to Customers served under the above mentioned Rate Schedules. Such rates (D) Sales Sen/ice gas shall be increased or decreased, from time to time, as provided by Section 1307(0 of the Public Utility Code and the Commission's regulations, to reflect changes in the level of recovery of gas costs related to Sales Service. COMPUTATION OF CC AND GCA PER MCF. The CC and GCA, per Mcf, shall be computed to the nearest one-hundredth cent (0.010) in accordance with the formulas set forth below:

(C} 1 CC= (S) * <1-T) ;and

^ x —

GCA = (S) x (1-T)

For March 1, June 1 and September 1 quarterly updates, CC is revised to:

CC= (CC1 + 0_+C1j x 1 SI S2 (1-T)

The CC and GCA so computed, shall be applicable to Customers receiving Sales Service pursuant to the rate schedules identified above. The CC and GCA, per Mcf, will vary, if appropriate, based upon annual filings by the Company pursuant to Section 1307(0 of the Public Utility Code and such supplemental filings as may be required or be appropriate under Section 13Q7(f) or the Commission's regulations adopted pursuant thereto.

In computing the Charges, per Mcf, pursuant to the formulas above, the following definitions shall apply:

"CC - Purchased Gas Costs determined to the nearest one-hundredth cent (0;01#) to be charged for each Mcf of-Sales Service gas supplied under Rate Schedules GR, CAP, GC, OL, L and MV-F, and under the Excess Off-Peak Use Rider of this Tariff.

"C" - Cost in dollars: (a) for all types of purchased gas, project the commodity and all non-storage interstate pipeline costs for each purchase (adjusted for net current gas stored) for the projected period when rates will be in effect; plus (b) the cost of gas provided from storage and LNG facilities, less (c) all reservation and commodity revenue, received from Rate CGS sales and (d) the new monthly cash-out result determined pursuant to Rule 10.11.3, or the successor thereto, of the Gas Choice Supplier Coordination Tariff.

"CI" - defined as the difference between the current projection of "C" and the projection of "C used to establish the rates effective December 1 for the period starting with the month of the effective date of the quarterly rate change through the end of the PGC period.

"CCr - defined as the Commodity Charge rate effective December 1 ofthe current PGC period. "O" - defined as the difference between the current net overtunder collections and the associated projected net

over/under collections from the applicable PGC rate calculation, as defined by Commodity Charge revenues less associated gas costs, from December 1 of the current PGC year through the end of the month before the applicable quarterly rate change.

GCA - the "E" factor component of the CC, representing the net overcollection or undercollection of Purchased Gas Costs. Applicable to Sales Sen/ice and determined to the nearest one-hundredth cent (0.010) for service provided under Rate Schedules GR,.GC, CAP, OL, L, MV-F, and the Excess Off-Peak Use Rider of this Tariff.

"E" - the net (overcollection) or undercollection of Purchased Gas Costs applicable to the CC. The net overcollection or undercollection shall be determined for the most recent period permitted under law, which shall

begin with the month following the last month which was included in the previous overcollection or undercollection calculation reflected in rates. The annual filing date shall be the date specified by the Commission for the Company's Section 1307(0 tariff filing.

Supplier refunds received after July 1, 2001 associated with Commodity Charges will be included in the calculation of "E" with interest added at the annual rate of six percent (6%) beginning with the month such refund is received by the Company.

(I) Denotes Increase (D)Denotes Decrease

Issued June 1,2006 Effective December 1,2006


Twenty Second Revised Page No. 37 PECO Energy Companv Superseding Twenty First Revised Page No. 37

BALANCING SERVICE COSTS (BSC)- Section 1307(fl PROVISIONS FOR RECOVERY OF BALANCING SERVICE COSTS.

Distribution rates for Balancing Service for all gas delivered under Rate Schedules GR. CAP, GC. OL, L and MV-F, and under the Excess Off-Peak Use Rider of this Tariff shall be charged at $0.4329 per Mcf (1,000 cubic feet) (D) for recovery of those costs, calculated in the manner set forth below, pursuant to Section 1307(f) of the Public Utility Code. Such rates for Balancing Service shall be increased or decreased, from time to time, as provided by Section 1307(f) of the Public Utility Code and the Commission's regulations, to reflect changes in the level of recovery of Balancing Service Costs. COMPUTATION OF BALANCING SERVICE COSTS PER MCF

Balancing Service Costs, per Mcf, shall be computed to the nearest one-hundredth cent (0.010) in accordance with the formula set forth below:

(C-E) 1 BSC= X

( S ) (1-T) For March 1, June 1 and September 1 quarterly updates, the BSC is revised to:

BSC= (CC1+O + CI - E) x _ L S1 S2 S1 (1 -T)

Projected Balancing Service Costs, so computed, shall be charged to Customers for all gas delivered pursuant to the rate schedules identified above. The amount of those costs, per Mcf, will vary, if appropriate, based upon annual filings by the Company pursuant to Section 1307(f) of the Public Utility Code and such supplemental filings as may be required or be appropriate under Section 1307(f) or the Commission's regulations adopted pursuant thereto.

In computing the Balancing Service Costs, per Mcf, pursuant to the formula above, the following definitions shall apply: "BSC - Balancing Service Costs determined to the nearest one-hundredth cent (0.010) to be charged to each Mcf of

gas delivered under Rate Schedules GR, GC, OL, L and MV-F, and under the Excess Off-Peak Use Rider of this Tariff. "C" - Cost in dollars: for all types of storage and related services, project the cost for the projected period when rates will be in effect "01" - defined as the difference between the current projection of "C" and the projection of "C" used to establish the

rates effective December 1 for the period starting with the month of the effective date of the quarterly rate change through the end of the PGC period.

"Cd" - defined as the rate associated with "C" effective December 1 of the cunent PGC period. "O" - defined as the difference between the current net over/under collections and the associated projected net

over/under collections from the applicable PGC rate calculation, as defined by storage and related services revenues less associated storage and related sen/ices costs from December 1 of the current PGC year through the end of the month before the applicable quarterly rate change.

"P - the net overcollection or undercollection of Balancing Service Costs. The net overcollection or undercollection shall be determined for the most recent period permitted under law, which shall

begin with the month following the last month which was included in the previous overcollection or undercollection calculation reflected in rates. The annual filing date shall be the date specified by the Commission for the Company's Section 1307(f) tariff filing.

Each overcollection or undercollection statement shall also provide for refund or recovery of amounts necessary to adjust for overrecovery or underrecovery of "E" factor amounts under the previous Balancing Service Costs Rate.

Interest shall be computed monthly at the rate as provided'for in Section 1307(f) of the Public Utility Code from the month that the overcollection or undercollection occurs to the effective month such overcollection is refunded or undercollection is recouped. The annual interest rate to be applied for net under collections will be six percent (6%) and eight percent (8%) for net overcollections.

As othenvise described in the Sales Service Costs section "Off-System Sales Sharing Mechanisms", the portion of margin revenue attributable to certain balancing assets shall be included in the calculation of "E".

Supplier refunds received prior to July 1, 2001 will be included in the calculation of "E" with interest added at the annual rate of six per cent (6%) beginning with the month such refund is received by the Company.

"S" - projected Mcf of gas to be delivered to Customers during the projected period when rates will be in effect. "SI" - defined as the applicable twelve month mcf of gas to be delivered to customers. T - the portion of any applicable state gross receipts tax rate recovered through base rates, expressed as a decimal.

The tax rate, if any, shall be the one in effect when the computation is made. ''S2'' - defined as mcf sales delivered to customers for the period starting with the month of the effective date

of the quarterly rate change through the end of the PGC period. T " - the portion of any applicable state gross receipts tax rate recovered through base rates, expressed as a

decimal. The tax rate, if any, shall be the one in effect when the computation is made. Balancing Service Costs - fixed and variable storage costs and the cost of propane to be charged to all customers

served under Rate Schedules GR, GC, OL, L, MV-F and under the Excess Off-Peak Use Rider of this Tariff. QUARTERLY UPDATES

The Company's rates for recovery of Balancing Service Costs are also subject to quarterly adjustments under procedures set forth in the Commission's regulations at 52.Pa. Code 53.64 (1) (5). Such updates shall reflect adjustments for under or over collections and adjustments to the projected cost:of Balancing Sen/ices based upon more current versions of the same sources of data and using the same methods to project the Balancing Service Costs approved by the Commission in the Company's most annual proceeding for recovery of Balancing Service Costs under section 1307 (f) of the Public Utility Code. (D) Denotes Decrease

Issued June 1,2006 Effective December 1,2006

Supplement No. 59 Gas-Pa.P.U.C. No. 2

Ninth Revised Page No. 35 P E C O Energy Companv Superseding Eighth Revised Page No. 35

SALES SERVICE COSTS (SSC) - Section 1307 (f) - Continued Each overcollection or undercollection statement shall also provide for refund or recovery of amounts necessary to adjust

for overrecovery or underrecovery of "E" factor amounts under the previous 1307(f) GCA.

Interest shall be computed monthly at the rate as provided for in Section 1307(f) of the Public Utility Code from the month that the overcollection or undercollection occurs to the effective month such overcollection is refunded or undercollection is recouped. The annual interest rate to be applied for net undercollections will be six percent (6%) and eight percent (8%) for net overcollections.

"S" - projected Mcf of gas to be billed to Customers receiving Sates Service under Rate Schedules GR, GC, CAP, OL, L & MV-F and Excess Off-Peak Use Rider during the projected period when rates will be in effect.

"51" - defined as the applicable twelve month mcf sales billed to customers receiving Sales Service under Rate Schedules GR, GC, CAP, OL, L, MV-F and Excess Off-Peak Use Rider.

"52" - defined as mcf sales billed to customers receiving Sales Service under Rate Schedules GR, GC, CAP, OL, L, MV-F and Excess Off-Peak Use Rider for the period starting with the month of the effective date of the quarterly rate change through the end of the PGC period.

T - the portion of any applicable state gross receipts tax rate recovered through base rates, expressed as a decimal. The tax rate, if any, shall be the one in effect when the computation is made.

"Purchased Gas Costs" - Include the direct costs paid by the Company for the purchase and delivery of natural gas (which also includes liquefied natural gas, synthetic natural gas, and natural gas substitutes, excluding propane, the cost of which is included in the Balancing Service Costs) to its system to supply its Customers (plus such portion of the Company's used and unaccounted for gas as the Commission permits), including costs paid under agreements to purchase natural gas from sellers; costs paid for transporting natural gas to its system; all charges, fees, taxes and rates paid in connection with such purchases, pipeline gathering, and transportation; and costs paid for employing futures, options and other risk management tools.

QUARTERLY UPDATES The Company's rates for recovery of gas costs related to Sales Service are also subject to quarterly adjustments under

procedures set forth in Section 1307 (0 of the Public Utility Code and in the Commission's regulations. Such updates shall reflect, adjustments for under or overcollections and, adjustments to the projected cost of gas related to Sales Sen/ice based upon more current versions of the same sources of data and using the same methods to project the gas costs related to Sales Service approved by the Commission in the Company's most recent annual proceeding for recovery of gas costs related to Sales Service under section 1307 (f).

OFF-SYSTEM SALES SHARING MECHANISM The rate for Sales Service gas as determined above shall be adjusted to reflect the operation of the off-system sales

sharing mechanism set forth herein. Revenues received by PECO Energy from third party storage management services and revenues from exchanges or swaps of gas, excluding the Customer's share of such revenue attributable to use or management of storage or related storage transportation capacity by customers not connected to the Company's system (which revenue shall be included in the Balancing Service Costs E factor, shall be included as off-system sales revenues). Effective April 1,2001 through March 31, 2009, and thereafter until terminated or otherwise revised by (C) final Order of the Commission, PECO Energy will be permitted to retain 25% of off system sales margin revenues up to the first $3.5 million in margin revenues, and PECO Energy will be permitted to retain 30% of off system sales margin revenues for margin revenues over $3.5 million. PECO Energy's share shall be computed on a pre-income tax basis, "below the line" for ratemaking purposes. The remaining off-system sales margin will be credited to the recovery of purchased gas costs. Margin revenues derived from sales of gas which is taken from system supply are defined as the unit revenue less the monthly weighted average commodity cost of gas, less any applicable taxes other than income taxes. Margin revenues derived from specific purchase sales (sales where a specific gas supply has been purchased to make a sale) shall be defined as the unit revenue less the specific purchase commodity cost of gas, less any applicable taxes other than income taxes. Specific purchase sales will have no impact on the cost of system supply. Off-system sales for operational purposes such as for meeting mandatory storage withdrawals are excluded from the mechanism. The calculations under this mechanism shall be subject to audit and to review in annual 1307(0 proceedings.

(C) Denotes Change

Issued June 1, 2006 Effective December 1, 2006


Twelfth Revised Page No. 60 P E C O Energy Companv Superseding Eleventh Revised Page No. 60

RATE C G S - CITY GATE S A L E S S E R V I C E AVAILABILITY

City Gate Sales Service is available in conjunction with the Compan/s gas transportation services (Rates TS-F and/or TS-I) upon execution of a City Gate Sales Service Agreement. Supplies from the Company's tota) gas acquisition pool are made available for purchase at the interstate pipeline delivery points (city gates), for redelivery to the Customer under the terms and conditions ofthe applicable transportation service(s).

QUALITY OF SERVICE

Firm: Customers electing firm service under this rate are not subject to interruption or proration except pursuant to Section 12 of the Rules and Regulations of this Tariff.

Interruptible: Customers electing interruptible sen/ice under this rate are subject to interruption from time to time as necessary to meet the demands of firm Customers. Under normal operating conditions, the Customer will be notified by 10:00 AM of the previous gas dispatch day of any interruption of service. Under emergency conditions, the Company may shorten this notice period and interrupt service at times other than the start of the gas dispatch day (10:00 AM).

BILLING

Acquisition Service Charge $47.50 per month.

Firm Supply Reservation Charge

$14.33 per month per Mcf of firm demand. (D)

Interruptible Supply Reservation Charge

Quarter f$/Mcf/Month) December 1 - February 28 $2.56 (D) March 1 - May 31 $2.09 June 1 - August 31 $2.42 September 1 - November 30 $3.26 (I)

Commoditv Charge A monthly rate, expressed in dollars per thousand cubic feet ($/Mc0, which represents the weighted average commodity

cost for the Company's total acquisition pool during the month of service. This rate is applied to the firm and interruptible usage at the Customer's location during the current billing month.

State Tax Adjustment Charge Does not apply to this rate

DEMAND QUANTITIES Firm Demand Quantity: The greater of: (a) the Customer's transportation contract quantity under Rate TS-F, or (b) the

highest daily firm usage at the Customer's location at any time during the current billing month and previous twelve months.

Interruptible Demand Quantity: The highest daily Rate CGS interruptible usage at the Customer's location during the current billing month.

MINIMUM CHARGE The minimum charge per month will be the Acquisition Sen/ice Charge, plus the applicable Supply Reservation Charge(s)

(Continued)

(I) Denotes Increase (D) Denotes Decrease

Issued June 1, 2006 Effective December 1,2006


PECO ENERGY COMPANY

GAS SERVICE TARIFF

COMPANY OFFICE LOCATION

2301 Market Street

Philadelphia, Pennsylvania 19101

For List of Communities Served, See Page 6.

Issued: June 1Mav-g-,9,2006 Effective: DecemberJune 1,2006

ISSUED BY: D. P. O'BRIEN - President PECO Energy Distribution Company

2301 MARKET STREET PHILADELPHIA, PA. 19101

NOTICE.


Fifty FifthFourth Revised Page No. 1 PECO Energy Company Superseding Fifty FourthT&fd Revised Page No. 1

TABLE OF CONTENTS Index of Communities Served ^ How to Use Loose-Leaf Tariff 3 Definition of Terms and Explanation of Abbreviations 4 RULES AND REGULATIONS:

1. The Gas Service Tariff 7 2. Service Specifications 8 3. Customers Installation 9 4. Application for Service 10 5. Credit 111

6. Service-Supply Facilities 121

7. Extensions 121

8. Rights-of-Way 13 9. Introduction of Service : 13

10. Company Equipment on Customer's Premises 14 11. Tariff Options on Applications for Service 15 12. Service Continuity 16' 13. Customer's Use of Service 21 14. Measurement 21 15. Tests 22 16. Payment Terms 231

17. Termination by the Company 251

18. Unfulfilled Contracts 25' 19. Cancellation by Customer : 26 20. General 26 21. Gas Choice Program Enrollment and/or Switching 27 22. Usage Data 27 23. Affiliated Marketer Standards of Conduct 28 24. Requests for Energy Efficiency Information 31 1

STATE TAX ADJUSTMENT CLAUSE 32a

UNIVERSAL SERVICE COST RECOVERY MECHANISM 33 SALES SERVICE COSTS - ("SSC") Section 1307(f) 3 4 ^ BALANCING SERVICE COSTS ("BSCL 37^ MIGRATION RIDER 391

TRANSITION SURCHARGE - SECTION 1307 (a) 40 1 2

CONSUMER EDUCATION CHARGE (CEC) 40A2

RATES: Rate GR General Service - Residential 41 5

Rate CAP Customer Assistance Program 421

Rate GC General Service - Commercial and Industrial 435

Rate OL Outdoor Lighting 445

Rate L Large High Load Factor Service 458

Rate MV-F Motor Vehicle Service-Firm 465

Rate MV-I Motor Vehicle Service-lnterruptible 471

Rate IS Interruptible Service 49 Rate TCS Temperature Controlled Service 51 3

Gas Transportation Service - General Terms and Conditions 53 Rate TS-I Gas Transportation Service - Interruptible 582

Rate TS-F Gas Transportation Service-Firm 592

Rate CGS - City Gate Sales Service 60 1 2* Rate NGS-Negotiated Gas Service 61 A1, 61B1

RIDERS: Applicability Index of Riders 62 Casualty Rider 63 Construction Rider 63 Excess Off-Peak Use Rider 647

Receivership Rider 65 Temporary Service Rider 65

Issued June IMav^ Q. 2006 Effective DecemberJune 1, 2006


Fifty FifthEoertfr Revised Page No. 1A PECO Energy Company Superseding Fifty FourUvPtafd Revised Page No. 1A

LIST OF CHANGES MADE BY THIS SUPPLEMENT

Sales Service Costs - (SSC) t2246nc" Revised Page No. 34 and 9'h Revised Page No. 35) —The Commodity Charge in this provision is indecreased. The Gas Cost Adjustment Charge is decreased. The Off-System Sales provision is extended through March 31. 2009.

Balancing Service Costs - (BSC) (224B'n d Revised Page No. 37) The Balancing Service Cost in this provision is decreased.

Rate CGS - Citv Gate Service - (12 t h Revised Page No. 60) The Firm Suoolv Reservation Charae is decreased. The Interruptible Supply Reservation Charae is increased.

Issued - June 1 M3v-3--:£. 2006 Effective DecernberJwe 1, 2006


Twenty Secondftret Revised Page No. 34 PECO Energy Company Superseding Twenty Ftrstietta Revised Page No. 34

SALES SERVICE COSTS (SSC) - Section 1307ffl

PROVISIONS FOR RECOVERY OF GAS COSTS RELATED TO SALES SERVICE

Rates for all Sales Service gas supplied under Rate Schedules GR, CAP, GC, OL, L and MV-F, and under the Excess Off-Peak Use Rider of this Tariff shall include the Commodity Charge (CC) at $11-02608:7085 per Mcf (1,000 cubic feet) for (ID) recovery of gas costs related to Sales Service, calculated in the manner set forth below, pursuant to Section 1307(f) of the Public Utility Code. In addition, the Gas Cost Adjustment Chaige (GCA) in the amount of a credit value of -$0.03564T5245 per Mcf will be applicable to (D) Customers served under the above mentioned Rate Schedules. Such rates for Sales Service gas shall be increased or decreased, from time to time, as provided by Section 1307(0 of the Public Utility Code and the Commission's regulations, to reflect changes in the level of recovery of gas costs related to Sales Sen/ice. COMPUTATION OF CC AND GCA PER MCF. The CC and GCA, per Mcf, shall be computed to the nearest one-hundredth cent (0.010) in accordance with the formulas set forth below:

(C) 1 CC= (S) x (1-T) ;and

_ ! _ _

GCA = (S) x (1-T)

For March 1, June 1 and September 1 quarterly updates, CC is revised to:

CC= (CC1 + 0_+C1) x 1 S1 S2 (1-T)

The CC and GCA so computed, shall be applicable to Customers receiving Sales Service pursuant to the rate schedules identified above. The CC and GCA, per Mcf, will vary, if appropriate, based upon annual filings by the Company pursuant to Section 1307(f) of the Public Utility Code and such supplemental filings as may be required or be appropriate under Section 1307(0 or the Commission's regulations adopted pursuant thereto.

In computing the Charges, per Mcf, pursuant to the formulas above, the following definitions shall apply:

"CC - Purchased Gas Costs determined to the nearest one-hundredth cent,(0.010) to be charged for each Mcf of-Sales Sen/ice gas supplied under Rate Schedules GR, CAP, GC, OL, L and MV-F, and under the Excess Off-Peak Use Rider of this Tariff.

"C - Cost in dollars: (a) for all types of purchased gas, project the commodity and all non-storage interstate pipeline costs for each purchase (adjusted for net current gas stored) for the projected period when rates will be in effect; plus (b) the cost of gas provided from storage and LNG facilities, less (c) all reservation and commodity revenue, received from Rate CGS sales and (d) the new monthly cash-out result determined pursuant to Rule 10.11.3, or the successor thereto, ofthe Gas Choice Supplier Coordination Tariff.

"CI" - defined as the difference between the cunent projection of " C and the projection of "C" used to establish the rates effective December 1 for the period starting with the month of the effective date of the quarterly rate change through the end ofthe PGC period.

"CCr - defined as the Commodity Charge rate effective December 1 of the current PGC period. "O" - defined as the difference between the current net over/under collections and the associated projected net

over/under collections from the applicable PGC rate calculation, as defined by Commodity Charge revenues less associated gas costs, from December 1 of the current PGC year through the end of the month before the applicable quarterly rate change.

GCA - the "E" factor component of the CC, representing the net overcollection or undercollection of Purchased Gas Costs. Applicable to Sales Service and determined to the nearest one-hundredth cent (0.010) for sen/ice provided under Rate Schedules GR, GC, CAP, OL, L, MV-F, and the Excess Off-Peak Use Rider of this Tariff.

"E" - the net (overcollection) or undercollection of Purchased Gas Costs applicable to the CC. The net overcollection or undercollection shall be determined for the most recent period permitted under law, which shall

begin with the month following the last month which was included in the previous overcollection or undercollection calculation reflected in rates. The annual filing date shall be the date specified by the Commission for the Company's Section 1307(f) tariff filing.

Supplier refunds received after July 1, 2001 associated with Commodity Charges will be included in the calculation of "E" with interest added at the annual rate of six percent (6%) beginning with the month such refund is received by the Company.

(I) Denotes.Increase IG¥D) Denotes Decrease

Issued June IMav-3- Q. 2006 Effective December IJwe 1, 2006


Twenty SecondPiret Revised Page No. 37 PECO Energy Company Superseding Twenty Firstteth Revised Page No. 37

BALANCING SERVICE COSTS (BSC)- Section 1307(0 PROVISIONS FOR RECOVERY OF BALANCING SERVICE COSTS.

Distribution rates for Balancing Service for all gas delivered under Rate Schedules GR, CAP, GC, OL. L and MV-F. and under the Excess Off-Peak Use Rider of this Tariff shall be charged at $0.43294552 per Mcf (1,000 cubic feet) for recovery of (D) those costs, calculated in the manner set forth below, pursuant to Section 1307(0 ot the Public Utility Code. Such rates for Balancing Service shall be increased or decreased, from time to time, as provided by Section 1307(f) of the Public Utility Code and the Commission's regulations, to reflect changes in the level of recovery of Balancing Sen/ice Costs. COMPUTATION OF BALANCING SERVICE COSTS PER MCF

Balancing Service Costs, per Mcf. shall be computed to the nearest one-hundredth cent (0.010) in accordance with the formula set forth below:

(C-E) 1 BSC= X

( S ) (1-T) For March 1, June 1 and September 1 quarterly updates, the BSC is revised to:

BSC = (CC1 + O + CI - E) x _ L SI S2 SI (1 -T )

Projected Balancing Service Costs, so computed, shall be charged to Customers for all gas delivered pursuant to the rate schedules identified above. The amount of those costs, per Mcf, will vary, if appropriate, based upon annual filings by the Company pursuant to Section 1307(f) of the Public Utility Code and such supplemental filings as may be required or be appropriate under Section 1307(f) or the Commission's regulations adopted pursuant thereto.

In computing the Balancing Service Costs, per Mcf, pursuant to the formula above, the following definitions shall apply: "BSC" - Balancing Service Costs determined to the nearest one-hundredth cent (0.010) to be charged to each Mcf of

gas delivered under Rate Schedules GR, GC, OL, L and MV-F, and under the Excess Off-Peak Use Rider of this Tariff. "C - Cost in dollars: for all types of storage and related services, project the cost for the projected period when rates will be in effect. " d " - defined as the difference between the current projection of "C and the projection of "C" used to establish the

rates effective December 1 for the period starting with the month of the effective date of the quarterly rate change through the end of the PGC period.

"Cd" - defined as the rate associated with "C" effective December 1 ofthe current PGC period. "O" - defined as the difference between the current net over/under collections and the associated projected net

over/under collections from the applicable PGC rate calculation, as defined by storage and related services revenues less associated storage and related services costs from December 1 of the current PGC year through the end of the month before the applicable quarterly rate change.

"E" - the net overcollection or undercollection of Balancing Service Costs. The net overcollection or undercollection shall be determined for the most recent period permitted under law. which shall

begin with the month following the last month which was included in the previous overcollection or undercollection calculation reflected in rates. The annual filing date shall be the date specified by the Commission for the Company's Section 1307(0 tariff filing.

Each overcollection or undercollection statement shall also provide for refund or recovery of amounts necessary to adjust for overrecovery or underrecovery of "E" factor amounts under the previous Balancing Service Costs Rate.

Interest shall be computed monthly at the rate as provided for in Section 1307(0 of the Public Utility Code from the month that the overcollection or undercollection occurs to the effective month such overcollection Is refunded or undercollection is recouped. The annual interest rate to be applied for net under collections will be six percent (6%) and eight percent (8%) for net overcollections.

As otherwise described in the Sales Service Costs section "Off-System Sales Sharing Mechanisms", the portion of margin revenue attributable to certain balancing assets shall be included in the calculation of "E".

Supplier refunds received prior to July 1, 2001 will be included in the calculation of "E" with interest added at the annual rate of six per cent (6%) beginning with the month such refund.is received by the Company.

"S" - projected Mcf of gas to be delivered to Customers during the projected period when rates will be in effect. "S1B - defined as the applicable twelve month mcf of gas to be delivered to customers. T - the portion of any applicable state gross receipts tax rate recovered through base rates, expressed as a decimal. The

tax rate, if any, shall be the one in effect when the computation is made. ''S2" - defined as mcf sales delivered to customers for the;period starting with the month of the effective date

of the quarterly rate change through the end of the PGC period. T - the portion of any applicable state gross receipts tax rate recovered through base rates, expressed as a

decimal. The tax rate, if any, shall be the one in effect when the computation is made. Balancing Service Costs - fixed and variable storage costs and the cost of propane to be charged to all customers

served under Rate Schedules GR, GC, OL, L, MV-F and under.the Excess Off-Peak Use Rider of this Tariff. QUARTERLY UPDATES

The Company's rates for recovery of Balancing Service Costs are also subject to quarterly adjustments under procedures set forth in the Commission's regulations at 52.Pa. Code 53.64 (1) (5). Such updates shall reflect adjustments for under or over collections and adjustments to the projected cost of Balancing Services based upon more current versions of the same sources of data and using the same methods to project the Balancing Service Costs approved by the Commission in the Company's most annual proceeding for recovery of Balancing Service Costs under section 1307 (0 of the Public Utility Code.

(D) Denotes Decrease

Issued June lMay-3 0, 2006 Effective December June 1,2006

Supplement No. 59S Gas-Pa.P.U.C. No. 2

NinthEig&h Revised Page No. 35 PECO Energy Companv Superseding EiqhthSeventh Page No. 35

SALES SERVICE COSTS (SSC) - Section 1307 ff) - Continued Each overcollection or undercollection statement shall also provide for refund or recovery of amounts necessary to adjust

for overrecovery or underrecovery of "E" factor amounts under the previous 1307(f) GCA.

Interest shall be computed monthly at the rate as provided for in Section 1307(f) of the Public Utility Code from the month that the overcollection or undercollection occurs to the effective month such overcollection is refunded or undercollection is recouped. The annual interest rate to be applied for net undercollections will be six percent (6%) and eight percent (8%) for net overcollections.

"S" - projected Mcf of gas to be billed to Customers receiving Sales Service under Rate Schedules GR, GC, CAP, OL, L & MV-F and Excess Off-Peak Use Rider during the projected period when rates will be in effect.

"51" - defined as the applicable twelve month mcf sales billed to customers receiving Sales Service under Rate Schedules GR, GC, CAP, OL, L, MV-F and Excess Off-Peak Use Rider.

"52" - defined as mcf sales billed to customers receiving Sales Service under Rate Schedules GR, GC, CAP, OL, L, MV-F and Excess Off-Peak Use Rider for the period starting with the month of the effective date of the quarterly rate change through the end of the PGC period.

T - the portion of any applicable state gross receipts tax rate recovered through base rates, expressed as a decimal. The tax rate, if any, shall be the one in effect when the computation is made.

"Purchased Gas Costs" - Include the direct costs paid by the Company for the purchase and delivery of natural gas (which also includes liquefied natural gas, synthetic natural gas, and natural gas substitutes, excluding propane, the cost of which is included in the Balancing Sen/ice Costs) to its system to supply its Customers (plus such portion of the Company's used and unaccounted for gas as the Commission permits), including costs paid under agreements to purchase natural gas from sellers; costs paid for transporting natural gas to its system; all charges, fees, taxes and rates paid in connection with such purchases, pipeline gathering, and transportation; and costs paid for employing futures, options and other risk management tools.

QUARTERLY UPDATES The Company's rates for recovery of gas costs related to Sales Sen/Ice are also subject to quarterly adjustments under

procedures set forth in Section 1307 (f) of the Public Utility Code and in the Commission's regulations. Such updates shall reflect, adjustments for under or overcollections and, adjustments to the projected cost of gas related to Sales Service based upon more current versions of the same sources of data and using the same methods to project the gas costs related to Sales Service approved by the Commission in the Company's most recent annual proceeding for recovery of gas costs related to Sales Service under section 1307 (f).

OFF-SYSTEM SALES SHARING MECHANISM The rate for Sales Service gas as determined above shall be adjusted to reflect the operation of the off-system sales

sharing mechanism set forth herein. Revenues received by PECO Energy from third party storage management services and revenues from exchanges or swaps of gas, excluding the Customer's share of such revenue attributable to use or management of storage or related storage transportation capacity by customers not connected to the Compan/s system (which revenue shall be included in the Balancing Service Costs E factor, shall be included as off-system sales revenues). Effective April 1,2001 through March 31, 20097, and thereafter until terminated or otherwise revised by final Order of the (C) Commission, PECO Energy Mil be permitted to retain 25% of off system sales, margin revenues up to the first $3.5 million in margin revenues, and PECO Energy will be permitted to retain 30% of off system sales margin revenues for margin revenues over $3.5 million. PECO Energ/s share shall be computed on a pre-income tax basis, "below the line" for ratemaking purposes. The remaining off-system sales margin will be credited to the recovery of purchased gas costs. Margin revenues derived from sales of gas which is taken from system supply are defined as the unit revenue less the monthly weighted average commodity cost of gas, less any applicable taxes other than income taxes. Margin revenues derived from specific purchase sales (sales where a specific gas supply has been purchased to make a sale) shall be defined as the unit revenue less the specific purchase commodity cost of gas, less any applicable taxes other than income taxes. Specific purchase safes will have no impact on the cost of system supply. Off-system sales for operational purposes such as for meeting mandatory storage withdrawals are excluded from the mechanism. The calculations under this mechanism shall be subject to audit and to review in annual 1307(f) proceedings.

(C) Denotes Change

Issued June 1.2006: ' )Novombor 28.2QQ5 Effective December 1, 20065


TwelfthElovonth Revised Page No. 60 PECO Energy Companv Superseding EleventhTeflto Revised Page No. 60

RATE C G S - CfTY GATE S A L E S S E R V I C E AVAILABILITY

City Gate Sales Service is available in conjunction with the Company's gas transportation services (Rates TS-F and/or TS-I) upon execution of a City Gate Sales Service Agreement. Supplies from the Company's total gas acquisition pool are made available for purchase at the interstate pipeline delivery points (city gates), for redelivery to the Customer under the terms and conditions of the applicable transportation service(s).

QUALITY OF SERVICE

Firm: Customers electing firm service under this rate are not subject to interruption or proration except pursuant to Section 12 of the Rules and Regulations of this Tariff.

Interruptible: Customers electing interruptible service under this rate are subject to interruption from time to time as necessary to meet the demands of firm Customers. Under normal operating conditions, the Customer will be notified by 10:00 AM of the previous gas dispatch day of any interruption of service. Under emergency conditions, the Company may shor ten this not ice per iod and interrupt serv ice at t imes other than the start of the gas dispatch day (10:00 AM) .

BILLING

Acquisition Service Charge $47.50 per month.

Firm Supply Reservation Charge

$14.3380 per month per Mcf of firm demand. (D)

Interruptible Supply Reservation Charge

Quarter (S/Mcf/Month) December 1 - February 28 $2.563^7 (Dl) March 1 - May 31 $2.09 {D) June 1 - August 31 $2.42 (1) September 1 - November 30 $3.26343 {ID)

Commoditv Charoe A monthly rate, expressed in dollars per thousand cubic feet ($/McO, which represents the weighted average commodity

cost for the Company's total acquisition pool during the month of service. This rate is applied to the firm and interruptible usage at the Customer's location during the current billing month.

State Tax Adjustment Charoe Does not apply to this rate

DEMAND QUANTITIES Firm Demand Quantity: The greater of: (a) the Customer's transportation contract quantity under Rate TS-F, or (b) the

highest daily firm usage at the Customer's location at any time during the cunent billing month and previous twelve months.

Interruptible Demand Quantity: The highest daily Rate CGS interruptible usage at the Customer's location during the cunent billing'month.

MINIMUM CHARGE The minimum charge per month will be the Acquisition Service Charge, plus the applicable Supply Reservation Charge(s)

(Continued)

(I) Denotes Increase (D) Denotes Decrease

Issued June 1. JNovember 28,20065 Effective December 1, 20065


BEFORE THE


PaPUC

v

PECO Energy Company

DocketNo. R-00061501

DIRECT TESTIMONY

OF

ERIC G. HELT

Direct Testimony Of Eric G. Helt

1 Q. Please state your name and business address.

2 A. My name is Eric G. Helt. My business address is PECO Energy Company, 2301

3 Market Street, S9-3, Philadelphia, PA 19101.

4

5 Q. By whom are you employed, and in what capacity?

6 A. I am employed by PECO Energy Company ("PECO" or "Company") as the Manager

7 ofthe Gas Acquisition and Planning group.

8

g Q. What is your educational background?

10 A. I received a Bachelor of Science in Electrical Engineering from Syracuse University,

11 and a Masters in Business Administration from Villanova University.

12

13 Q. Describe your work experience.

14 A. I have been employed by PECO Energy since June of 1988. I have held various

15 positions within Nuclear, Gas Operations, Electrical Engineering, Distribution

16 System Operations, and Gas Supply & Transportation.

17

18 Q. Please identify your current job responsibilities.

19 A. My responsibilities include day-to-day management and oversight for the natural gas

20 procurement, short-term planning, long-term planning and contract administration

21 functions within the PECO Gas Department.

22

1 Q. Mr. Helt, what is the purpose of your testimony in this proceeding?

2 A. My testimony will support the cost estimates used in calculating the proposed PGC

3 23 rate and the historic costs used in section 1 of the Company's advance filing,

4 made on April 28, 2006 ("Advanced Information"). My testimony will also support

5 the Company's gas procurement policies and purchases relevant to this proceeding,

6 the off-system sales sharing mechanism, and the estimated gas costs in Sections 6

7 and 7 of the Advance Information.

8

g Q. Are you sponsoring any exhibits in this proceeding?

10 A. Yes. I am sponsoring Sections 1, 3, 4, 6, 7, 8, 9,13, 15, 16,17,18, 19, 20, 21 and

11 22 ofthe Advance Information.

12

13 Q. Concerning the Off System Sales sharing mechanism that is scheduled to end

14 March 31, 2007, are there any changes PECO is proposing to make?

15 A. Yes. The Off System Sales Sharing mechanism set forth in the tariff is scheduled to

16 expire on March 31, 2007. We would like to propose a 2-year extension ofthe

17 existing terms through March 31, 2009. Doing so would allow us certainty as we

18 evaluate longer-term opportunities. The current sharing mechanism permits PECO

19 to retain 25% ofthe first $3.5 million in margin revenues and 30% of margin

20 revenues above $3.5 million, and has been in effect since April 2001. During that

21 time, the mechanism has provided an appropriate incentive to PECO to aggressively

22 seek off system sales opportunities for the benefit of PECO's customers.

23

1 Q. Please provide a general description of PECO's gas system.

2 A. PECO's gas system is located in the southeast corner of Pennsylvania and serves

3 the four county area surrounding the city of Philadelphia and a portion of Lancaster

4 County. Since this is not a gas-producing area, PECO and its natural gas

5 customers are dependent upon the interstate natural gas pipeline system to deliver

6 natural gas into the PECO gas distribution system. This dependency applies to all

7 gas supplies, storage, and interstate transportation services, except for PECO's own

8 on-system peak shaving facilities. During 2005, PECO sold approximately 60 billion

9 cubic feet ("Bef) of gas and transported 27 Bef of gas for its retail end-users.

10

11 Q. Please identify PECO's interstate suppliers.

12 A. Texas Eastern Transmission, LP ("Texas Eastern"), Transcontinental Gas Pipe Line

13 Corporation ("Transco") and Eastern Shore Natural Gas Company ("Eastern Shore")

14 comprise the three interstate natural gas pipelines that deliver gas directly to

15 PECO's city gates. In addition, Dominion Transmission (formally CNG Transmission

16 Corporation), Equitrans, Inc. ("Equitrans"), and CMS Panhandle Eastern Pipe Line

17 Company ("PEPL") provide upstream transportation and natural gas storage

18 services, which PECO uses to meet winter daily and peaking requirements. These

19 transportation and storage services require intermediate transportation services

20 from Texas Eastern, Transco and Eastern Shore to deliver storage gas and other

21 flowing gas supplies to the PECO gas distribution system.

22

1 Practices and Procedures and The PGC No. 23 Filing

2 Q. Does PECO pursue a least-cost procurement policy?

3 A. Yes, it does.

4

5 Q. Please describe PECO's least-cost procurement policy.

6 A. PECO's gas procurement policy is designed to achieve a reasonable balance of

7 long and short-term gas purchases. This assures system supply reliability at the

8 least cost. The details of PECO's actual gas purchases for the fifteen months

9 ending March 31, 2006 and its estimates through November 30, 2007 are presented

10 in the Company's Advance Information (Sections 1, 6 and 7). PECO utilizes its

11 interstate transportation and storage entitlements to obtain and deliver market-

12 priced supplies to the PECO gas distribution system.

13

14 Q. Please explain how that policy is implemented in actual practice.

15 A. PECO manages its least-cost procurement strategy through purchases made under

16 long-term contracts and spot purchases.

17 Pricing of purchases made under long-term contracts generally focuses around two

18 types of mechanisms: daily or first ofthe month indices and adjusted NYMEX

19 futures pricing. Index-based pricing refers to either the use of a first-of-the-month

20 index at a particular location, such as that published in Inside FERC Gas Market

21 Report, or a daily index at a particular location, such as those published in Gas

22 Daily. NYMEX futures pricing refers to the use of a selection of monthly gas futures

1 prices from a NYMEX futures contract pricing screen, or a monthly NYMEX

2 settlement price, plus or minus a negotiated locational basis.

3 Spot purchases are typically made using a NYMEX pricing approach adjusted for

4 locational basis. PECO receives bids from suppliers for the lowest basis numbers

5 which, when added to the applicable NYMEX futures price or NYMEX Settlement

6 price, affords PECO the least cost gas price at its citygate. PECO also uses an

7 auction process to receive least-cost bids for index based and NYMEX futures (plus

8 or minus a basis) priced gas supplies. In this process, the index-based bids may or

9 may not contain a premium or discount depending on the market and time of year.

10 Additionally, in accordance with our PGC No. 22 settlement, PECO has continued

11 its program to purchase natural gas for both winter and summer supplies using a

12 layered approach of locking in prices ahead of each season with long-term gas

13 purchase agreements (those with primary terms of at least twelve months) for at

14 least 30,000 dth per day April through November and March (of the next year), and

15 50,000 dth per day December through February.

16

17 Q. Why does PECO employ a variety of pricing approaches rather than just one?

18 A. PECO utilizes a combination of different pricing approaches to reduce the price risk

19 associated with using only one approach. As PECO has negotiated and

20 renegotiated long-term contracts, it has sought the ability to acquire gas supplies

21 utilizing these different pricing options. The flexibility of using different pricing

22 methods has enabled PECO to diversify its gas-purchasing portfolio. By employing

1 these options, PECO reasonably limits its exposure to intra-month, monthly and

2 seasonal pricing volatility.

3

4 Q. What other tools does PECO employ to mitigate its exposure to price

5 volatility?

6 A. PECO also mitigates its exposure to price volatility through the utilization of its

7 interstate pipeline storage entitlements and Company-owned LNG facility. In

8 addition to providing a source of wintertime deliverability, access to storage and

9 LNG allow PECO to purchase natural gas when natural gas prices have been lower

10 and less volatile historically (the summer period) for redelivery during periods of

11 strong demand and higher, more volatile prices (typically, the wintertime). This, in

12 effect, allows PECO to hedge against the volatility of typically higher winter gas

13 prices. Additionally, PECO uses a layered, ratable gas purchase price averaging

14 approach to obtain its summer and winter supplies.

15

16 Q. Does storage provide PECO with a substantial source of supply?

17 A. Yes. On a design peak day, storage represents about one third of PECO's supply.

18 Similarly, LNG and delivered peaking services also represent about one third ofthe

19 supply. For a normal winter day, storage withdrawals represent about one half of

20 the supply needed for PECO's system. Overall, use of storage and LNG enables

21 PECO to substantially mitigate its exposure to the price volatility that typically occurs

22 in the winter.

23

1 Q. Please explain how PECO's strategy is designed to assure system reliability.

2 A. PECO's reliability strategy is two-fold. First, PECO must assure that there is

3 sufficient capacity to satisfy design day deliverability requirements. This capacity is

4 diversified into three tiers: 1) pipeline firm transportation capacity; 2) pipeline

5 storage capacity; and 3) peaking capacity. Peaking capacity refers to the

6 aforementioned on-system LNG facility, on-system propane-air facility and

7 contracted peaking services with reliable third party suppliers.

8 Second, PECO must ensure that a firm source of supply exists to utilize the capacity

9 resources just described. PECO ensures the availability of firm supplies through its

10 contractual arrangements with its suppliers. All of PECO's long-term supply

11 contracts and its delivered peaking service contracts contain stringent liquidated

12 damages clauses for supplier non-performance. In these supply contracts, if PECO

13 is unable to replace the undelivered quantity on a timely basis, then the supplier is

14 charged an additional amount as compensation for damages PECO would likely

15 sustain in the event that it was unable to obtain a replacement supply. Similarly,

16 PECO's asset management agreements, where a third-party manages PECO's

17 storage and related transportation contracts for a fee, also contain stringent

18 liquidated damages clauses.

19 With this contract language as a strong deterrent, PECO has experienced no

20 instances of failure-to-perform by the counter parties on its long-term gas supply and

21 asset management agreements. PECO also attributes this high level of reliable

22 performance in part to the reliability of the counter parties it has contracted with.

23

1 STATUTORY FINDINGS

2 Q. The Commission is required to make certain findings regarding the least-cost

3 procurement methods of a gas utility to ensure that the PGC rate is just and

4 reasonable. Please address the necessary findings.

5 A. In addition to PECO's existing long-term and short-term gas purchase agreements,

6 PECO has entered into several new, market priced gas purchase agreements for

7 the purpose of supplying the natural gas requirements of PECO's gas customers.

8 These include the following Winter Purchase packages:

9 • 991 Dth per day for December 2005 through March 2006 from a supplier on

10 Texas Eastern

11 • 12,500 Dth per day for November 2005 through March 2006 from a supplier

12 on Texas Eastern

13 • 4,554 Dth per day for December 2005 through February 2006 from a supplier

14 on Transco


16 on Transco

17 • 20,500 Dth per day for November 2005 and March 2006 from a supplier on

18 Texas Eastern

19 • 11,188 Dth per day for December 2005 through March 2006 from a supplier

20 on Texas Eastern


22 on Transco


2 on Transco


4 on Transco


6 on Texas Eastern


8 on Texas Eastern

9 # 11,500 Dth per day for November 2005 through March 2006 from a supplier

10 on Texas Eastern

11 • 7,500 Dth per day for November 2005 through March 2006 from a supplier on

12 Texas Eastern

13

14 All of these agreements provide PECO and its customers with reasonably priced

15 natural gas at flexible, market prices.

16 In addition, PECO also contracted for reasonable, market priced firm peaking

17 supplies totaling 20,000 Dth per day from November through March, and 25,000 Dth

18 per day, up to a maximum of 125,000 Dth from January through February, for the

19 2005/2006-winter. These supply packages were delivered on Transco.

20

21 Q. What steps has PECO undertaken to obtain lower-cost gas supplies on both a

22 short and long-term basis within and outside Pennsylvania, including the use

10

1 of gas transportation arrangements with pipelines and other distribution

2 companies?

3 A. PECO acquires market-priced natural gas supplies that are delivered to the city-gate

4 connections the Company has on Texas Eastern and Transco pipelines. PECO

5 purchases its supplies from third parties under spot and long-term arrangements.

6 Purchases are accomplished through a monthly bidding process, a paper auction,

7 Requests for Proposals, and telephone based bids. Long-term gas purchases are

8 based off of Index prices. PECO believes that the diversity of its purchasing

9 program has enabled it to acquire least cost, reliable gas supplies for its customers

10 under reasonable terms and conditions.

11 In addition, under the terms ofthe PGC 20 (Docket No. R-00038409) settlement

12 agreement, (and modified slightly by PGC 22 settlement) PECO is required to lock-

13 in the price of a minimum volume of its long-term gas purchases. This mechanism

14 is designed to mitigate PECO's exposure to natural gas price volatility through what

15 amounts to a type of "dollar averaging" purchasing approach.

16 To implement the terms of the PGC Settlement agreement, PECO has adopted the

17 following policy as part of its overall risk management strategy relative to natural gas

18 procurement:

19 20 Hedging Policy 21 22 Long-Term hedging will be initiated through Gas Acquisition & Planning team review 23 using technical and fundamental analysis. The team will also seek consultation with 24 outside sources. In the interest of reducing exposure to natural gas price volatility and to 25 be consistent with the PGC 20 settlement, GS&T will lock-in the price of at least 30,000 26 dth per day April through November and March (of the next year), and a minimum of 27 50,000 dth per day December through February. Based on PECO's risk management 28 policy, no more than 50% of its projected monthly purchases under long-term (primary

11

1 term of at least 12 months) gas purchase agreements (excluding no-notice swing supply 2 on Transco) will be locked-in under this methodology. For the winter and summer 3 seasons, such locked-in purchases must be made in a layered method in accordance with 4 the PGC 20 Settlement. GS&T will use its discretion as to when it locks-in such gas 5 prices (in accordance with the PGC 20 Settlement Guidelines). Its remaining long-term 6 purchases will be priced at the prevailing market rates. 7

8 Q. Did PECO purchase gas from any affiliated interest over the past 12 months?

9 A. No.

10

11 Q. Has PECO withheld or caused to be withheld from the market any gas

12 supplies which should have been utilized as part of a least cost fuel

13 procurement policy?

14 A. No. As PECO is neither a natural gas producer nor a wholesale market participant

15 of significant size or scope, PECO could not benefit from withholding any gas

16 supplies from the market. For the same reason, PECO has no market power in the

17 pipeline capacity market. PECO engages only in purchases that are related to

18 providing natural gas service to its retail customers and a relatively insignificant

19 amount of off-system sales from which its retail customers derive substantial benefit.

20

21 Q. Has PECO included any purchased gas costs that should be charged to

22 transportation customers?

23 A. No. In the situation where a transportation customer uses PECO purchased gas

24 under Rate IS, these costs are credited toward the recovery of gas costs from

25 PECO's 1307(f) retail customers. In addition, PECO provides a stand-by sales

26 service for firm transportation customers that allows the customer to purchase gas

12

1 from the Company at the standard retail rate when its supplier fails to deliver gas.

2 The standby-sales service revenues derived from this service are credited towards

3 recovery of purchased gas costs through the 1307(f) mechanism. If a firm

4 transportation customer has failed to elect a standby sales service and uses PECO

5 purchased gas for deficient supplier deliveries, they are charged Rate GC for the

6 gas used and are assessed a $25 per mcf penalty for the deficient deliveries, which

7 is also credited to PECO's 1307(f) retail customers. Also, for transportation

8 customers who use Rate CGS (City Gate Sales Service), the associated reservation

9 charge and gas commodity charge revenues are credited towards the recovery of

10 purchased gas costs. Finally, as a result of Docket No. R-00932935, a balancing

11 surcharge in the amount of $0.0196 per mcf for transportation customers is credited

12 to 1307(f) retail customers.

13

14 Historic Gas Purchases

15 Q. Please describe the information that is provided in Section 1 of the Company's

16 Advance Information filing.

17 A. The information that is provided in Section 1 ofthe Company's Advance Information

18 filing accounts for all of the Company's purchased gas costs during the historic

19 period of April 2005 through March 2006. This information includes the source of

20 the gas, the price and the associated volumes. These purchases result from

21 application of the Company's policy to purchase natural gas that reasonably assures

22 system reliability at the least cost.

23

13

1 Q. Please explain the Cash Out line item shown on page 2 of Section 1?

2 A. The Cash Out line item reconciles imbalances caused by the timing of Low Volume

3 Transportation (LVT) customer transfers and the corresponding changes to the

4 levels of assigned pipeline capacity associated with these changes. Cash out

5 charges are either received from or paid to LVT Suppliers. These transactions are

6 consummated in accordance with the Company's legal obligations under the

7 Company's Gas Choice Program,

s

9 Design Dav Requirements

10 Q. Please provide an overview ofthe design day requirements.

11 A. Details of PECO's design day methodology and an account ofthe 2006/2007 winter

12 design day requirement are included in Section 16 ofthe Advance Information.

13 Section 16 also contains the design day analysis that PECO agreed to employ in the

14 settlement of the PGC No. 13 proceeding. As described in Section 16, PECO's

15 supply resources, combined with peaking and delivered supply, will meet its design

16 day requirement of 780,099 mcf/day for the 2006/2007 winter season.

17

18 PECO's Hedging Program 19 20 21 Q. Please explain PECO's current hedging program for natural gas.

22 A. PECO operates a hedging program to reduce the exposure of PECO and its

23 customers to natural gas price volatility. The program is a "volumetric" plan, locking

24 in long-term prices for a specific amount of natural gas for each day beginning up to

14

1 eighteen months in advance of actual delivery. Purchases are managed by PECO's

2 Gas Acquisition and Planning Group, in accordance with deadlines established in

3 the settlement of PECO's 2005 PGC proceedings approved by the Commission.

4 For days during the summer months (April - October), PECO's program locks in

5 30,000 Dth for each day by locking in pricing in amounts of up to 6,000 Dth for that

6 day, as shown in the following table (for 2007):

Summer Months Volume/Day (Dth) Deadline By

Apr 2007 - Oct 2007 30,000 6,000 3/1/2006

6,000 6/1/2006

6,000 9/1/2006

6,000 12/1/2006

6,000 3/1/2007

7 For days during the winter months (November - March), when the natural gas needs

8 of PECO's customers are significantly greater due to heating requirements, PECO's

9 program locks in prices for 50,000 Dth/day using a set of similar deadlines

10 established by the settlement:

Winter Months Volume/Day (Dth) Deadline By

Nov 2007- Mar 2008 50,000 10,000 10/1/2006

10,000 1/1/2007

10,000 4/1/2007

10,000 7/1/2007

10,000 10/1/2007

11 In addition to this forward "price-locking," PECO also effectively hedges additional

12 volume by filling its 22 BCF of natural gas storage during the summer months (when

15

1 natural gas is generally less expensive) and withdrawing stored gas during the

2 winter season. This use of natural gas storage limits exposure to winter prices and

3 also contributes to the reliability of PECO's system.

4 Q. Has PECO conducted a study of its hedging program?

5 A. Yes. As required by the Commission's Order approving the settlement of PECO's

6 2005 PGC proceedings, PECO undertook a study of its hedging program. This

7 study reviewed minimum and maximum flowing gas supplies during the year (both

8 winter and non-winter periods) to determine whether the volumes PECO was

9 hedging were appropriate. In analyzing the summer periods, it quickly became

10 evident that hedging additional quantities would not be prudent. As an example, for

11 the summer of 2006, on a monthly basis, approximately 50% of our flowing gas is

12 hedged, while approximately 50% is subject to current market pricing. This

13 constitutes what we feel is a healthy mix of hedged versus current market priced

14 gas, as well as providing the required amount of operational flexibility. Any more

15 gas being hedged could result in either of the following situations: (1) inadequate

16 participation by customers in a declining market scenario (the current situation is a

17 perfect example of this) or (2) an inability on the part of PECO to be able to "turn

18 back" unneeded supply should conditions warrant.

19 Q. Please explain the analysis PECO performed.

20 A. As an initial step, PECO reviewed its planned monthly needs for the 2005-2006

21 winter (November - March) and calculated the percentage of "flowing supply" (i.e.,

22 the percentage of gas PECO expected to purchase) that PECO would "price lock"

16

1 and the amount of planned storage withdraws to determine the total amount of

2 planned need that was actually hedged. The following table shows this analysis:

Planned monthly need

Amount "price locked"

Planned storage withdraws

%of "flowing supply" hedged

%of planned need "hedged II

Nov. 6,090,270 1,560,000 0 37% 26% Dec. 10,051,223 1,612,000 1,474,019 19% 31% Jan. 12,645,086 1,612,000 4,070,300 19% 45% Feb. 9,599,156 1,456,000 2,223,480 19% 38% Mar. 7,680,498 1,612,000 2,315,700 19% 51% Totals 46,066,233 7,852,000 10,083,499 22%

For the winter months, the combined effect of PECO's "price locking" and storage

purchased effectively hedged thirty-nine percent (39%) of PECO's total winter

planned need.

10 Q. Did PECO therefore meet thirty-nine percent of its planned monthly need

11 during the 2005-06 winter months through prior "price locking" of gas

12 supplies and storage withdrawals?

13 A. No, PECO was able to exceed this percentage. Due to the warm 2005-06 winter,

14 PECO's prior "price locking" and storage withdrawals effectively hedged forty-three

15 percent (43%) ofthe actual monthly need of PECO's customers, as shown in the

16 following table:

17

17

2 3 4

5

6

7

8

9

10

11

Actually Occurred

Monthly Need % Met with "price locked" gas

% met with storage % of need "hedged"

5,363,183 29% 17% 46%

10,850,381 15% 23% 38%

9,006,007 18% 13% 30%

9,445,336 15% 34% 49%

7,129,155 23% 33% 55%

41,794,062

Notably, as a result of warm temperatures, PECO did not rely upon storage

withdrawals as much as anticipated in the early winter months. Because PECO was

required to draw down this storage in later winter months to avoid certain "must turn"

penalties associated by contract with PECO's storage system, PECO was able to

avoid additional market purchases of gas during those months. In fact, at one point

in March 2006, due to particularly warm temperatures, PECO considered whether

natural gas that had been purchased under PECO's forward "price locking" would

have to be directed to storage in light of reduced customer usage.

12 Q. Do the results of this analysis suggest that PECO should change the

13 volumetric amounts of natural gas PECO hedges through "price locking" or

14 storage?

15 A. No, they do not. After careful consideration of market practices and the amount of

16 storage PECO maintains, which reduces the need to purchase gas at current market

17 prices during the winter, PECO believes the amount of gas that is hedged through

18

1 forward purchases and storage is appropriate. This last warm winter confirmed

2 PECO's approach; if PECO had "price locked" any more gas, PECO may have been

3 exposed to "must turn" storage penalties and other operational costs.

4 PECO is aware that some local distribution companies have undertaken financial

5 hedging (i.e., cash hedging without physical delivery) in limited circumstances and with

6 Commission approval. However, PECO believes that the same results can be

7 achieved through its forward purchasing program. In addition, in light ofthe relatively

8 stable nature of PECO's customer load, which is not growing by a large amount each

9 year, there appears to be no need to add additional complexity either by varying

I o volumetric amounts within the winter or summer seasons or imposing smaller, more

I I incremental "accumulating" purchases (i.e., purchasing 1/100th of a day's supply

12 every day instead purchasing up to 3,000 Dth/day during a three month window).

13 14 Q: Does this conclude your testimony?

15 A: Yes.

19


RECEIVED JUN 0 1 2QQ6

PA PUBLIC UTILITY COMMISSION SECRETARY'S BUREAU

BEFORE THE


PaPUC v

PECO Energy Company


DIRECT TESTIMONY

OF

Amy E. Hamilton

1 Direct Testimony of Amy E. Hamilton

2

3 Q. Please state your name and business address.

4 A. My name is Amy E. Hamilton. My business address is PECO Energy Company,

5 2301 Market Street, Philadelphia, PA 19103.

6

7 Q. What is your educational background?

8 A. In 1991 I received a Bachelor of Arts degree from Gettysburg College. I received

9 a Juris Doctorate in 1997 from Widener University School of Law.

10

11 Q. Please describe your work experience relevant to your testimony.

12 A. I have been employed by either PECO Energy Company (PECO) or its affiliate,

13 Exelon Business Services Company (Exelon BSC) since 1999. I started as an

14 Assistant General Counsel in the Regulatory Group in the legal department of

15 Exelon BSC In that role I represented clients across the electric, gas and power

16 organizations in state and federal regulatory proceedings, negotiated regulated and

17 unregulated contracts, and provided regulatory legal advice regarding a variety of

18 business decisions. Then in May 2004,1 was appointed to my current position of

19 Manager, Gas Regulations and Transportation Services. In this role, I am

20 responsible for managing the financial and service reliability risk of PECO's

21 interstate natural gas transportation and storage contracts, through monitoring and

22 actively participating in proceedings at the Federal Energy Regulatory

23 Commission (FERC) that could impact PECO's service or cost of service to its

1 gas customers. My group is also actively involved in global regulatory issues that

2 impact the gas industry through participation in the American Gas Association

3 (AGA), North American Energy Standards Board (NAESB), and the Energy

4 Association of Pennsylvania (EAP). Finally, I manage all aspects of PECO's high

5 volume transportation program.

6

7 Q. What is the purpose of your testimony in this proceeding?

8 A. I will address PECO's decisions concerning firm natural gas pipeline

9 transportation and storage contracts that have been made since PECO's 2005

10 1307(f) filing (PGC 2005). I will also provide an explanation of Sections 10, 11,

11 12, and 14 submitted by PECO as part ofthe advance filing required by 52 Pa

12 Code §§ 53.64 and 53.65 and filed on April 28, 2006 (Advance Infonnation),

13 which address PECO's high volume transportation program. Finally, consistent

14 with the Joint Petition for Complete Settlement of PGC 2005,1 will (1) report on

15 the status ofany legal proceedings against Dominion Transmission, Inc. (DTI)

16 and/or PECO's suppliers to recover any excess natural gas charges caused by

17 DTI's November 24, 2004 storage reporting error; and (2) provide a summary of

18 PECO's programs to monitor and reduce lost and unaccounted for gas.

19

20 Q. Are you sponsoring any exhibits?

21 A. Yes. I am sponsoring Sections 2, 5, 10, 11, 12, and 14 of the Advance

22 Information.

23

1 Firm Interstate Pipeline Contracts

2

3 Q. Can you please identify the firm interstate natural gas pipeline service

4 agreements that have been subject to renewal since PGC 2005 was filed?

5 A. There were several storage and transportation service agreements subject to

6 renewal/termination notice in the past year:

7 > PECO's CDS and FT-1 long-haul firm transportation contracts with Texas

8 Eastern Transmission Corporation (Texas Eastern) fall into evergreen

9 status as of October 31, 2006 and may be terminated effective October 31

10 of every year thereafter by either party with two-years written notice. No

11 notice of termination has been given by either PECO or Texas Eastern.

12 > PECO's FTS-2 market area transportation contract with Texas Eastern is

13 currently in evergreen status and may be terminated by PECO or Texas

14 Eastern with twelve-months notice. This contract is not subject to pre-

15 granted abandonment because it is a Part 157 service. No notice of

16 termination has been given by either PECO or Texas Eastern.

17 > PECO's STS transportation and SS-3 storage contracts with Equitrans, LP

18 (Equitrans) are currently in evergreen status and may be terminated by

19 either party effective April 1 of any year with twelve-months notice. These

20 contracts are also not subject to pre-granted abandonment because each is

21 a Part 157 service. No notice of termination has been given by either

22 PECO or Equitrans.

1 > PECO's S-2 and WSS storage contracts with Transcontinental Gas Pipe

2 Line Corporation (Transco) are currently in evergreen status and require a

3 twelve-month notice of termination. No notice of termination has been

4 given by either PECO or Transco.

5 > Finally, PECO's FT long-haul transportation contract with Transco fell

6 into evergreen status as of March 31, 2006 and may be terminated by

7 either party with three years notice. No notice of termination has been

8 given by either PECO or Transco.

9

10 Q. Why hasn't PECO issued any notices of termination on the above contracts?

11 A. PECO continues to require the above-mentioned services to satisfy primarily

12 temperature sensitive demands of both its retail sales customers and its Gas

13 Choice customers for whom PECO is the supplier of last resort.

14

15 Q. Please explain.

16 A. First, each of these agreements is designed to provide PECO satisfactory capacity

17 to transport natural gas supplies needed to serve the demand of PECO's sales

18 customers. Second, there does not appear to be an economic market alternative to

19 these agreements. We determined this by, among other things, soliciting bids to

20 replace each of the above contracts, to which we received no responses.

21

22

1 Q. How did you solicit the bids?

2 A. Consistent with the settlement of PECO's gas restructuring proceeding at Docket

3 No. R-00994787, PECO issues a request for proposal (RFP) for its firm storage

4 and transportation contracts that are subject to termination and/or renewal,

5 whereby interested parties may offer to provide a contract service as a replacement

6 to service provided by the pipeline supplier. The RFPs are sent to Pennsylvania

7 natural gas suppliers (NGS), interstate pipeline companies, and large commercial

8 and industrial customers.

9

10 Q. Please describe the RFPs PECO has issued for the above-mentioned

11 contracts.

12 A. PECO issued an RFP on November 17, 2004 seeking alternative service to its

13 Equitrans STS and SS-3 contracts, Transco WSS and S-2 contracts, and Texas

14 Eastern FTS-2 contract. On May 27, 2005, PECO issued an RFP for the Texas

15 Eastern FT-1 and CDS agreements as well as the Transco FT contract. On April

16 14, 2006, PECO issued an RFP to replace all or a part of PECO's CDS and FT-1

17 contracts with Texas Eastern, as well as replacing all or part of PECO's FT

18 contract with Transco. PECO received no responses to any of the above-

19 mentioned RFPs.

20

21

1 Q. By what other means than the RFP process does PECO try to obtain

2 comparable services at a lower cost than the existing services?

3 A. PECO reviews all pertinent open seasons of pipelines to consider opportunities for

4 new and replacement services. Additionally, we are in regular contact with the

5 representatives of those pipelines to discuss our supply portfolio needs and

6 explore potentially less costly options to existing services. Despite these efforts,

7 PECO has been unable to obtain any comparable replacement service at a lower

8 cost than the existing services. Therefore, it is necessary for PECO to retain these

9 agreements as part of its overall capacity portfolio in order to satisfy the demand

10 requirements of its retail sales and Gas Choice customers.

11

12 Q. Did PECO participate in any of the pipeline open seasons that it reviewed?

13 A. Yes. In January 2006, PECO submitted a non-binding bid to participate in

14 Panhandle Eastern Pipe Line Company's (PEPL) Mainline Expansion Project

15 open season. In March of 2006, PECO submitted a non-binding bid to participate

16 in Texas Eastern's Lebanon East Expansion Project open season. In December

17 2005, PECO submitted a bid to participate in Transco's Sentinel Expansion

18 Project open season. Finally, PECO is currently evaluating the opportunity to

19 participate in the Market Hub Partners storage open season.

20

21 Q. Has PECO entered into any precedent agreement with respect to the above

22 open seasons?

23 A. No.

1 Q. Why did PECO participate in the above-mentioned open seasons?

2 A. PECO participated in the open seasons in order to potentially acquire incremental

3 firm service from a supply area to its city gate. As an added advantage,

4 participation in these particular open seasons would diversify PECO's

5 transportation and supply portfolio.

6

7 Q. Please explain.

8 A. Acquiring transportation capacity through PEPL's and Texas Eastern's open

9 seasons would allow PECO to acquire capacity from Mid-continent to Lebanon

10 and from Texas Eastern at M2 to PECO's city gate. Transportation capacity

11 through Transco's Sentinel Expansion begins at the Pleasant Valley interconnect

12 at Cove Point and continues to PECO's city gate. In both cases, PECO would be

13 adding a non-Gulf source of supply to its portfolio.

14

15 Q. Has PECO entered into any new pipeline transportation or storage contracts

16 since PGC 2005?

17 A. Yes. In November of 2005, PECO entered into a new contract with Texas Eastern

18 for 29,210 dth of M2 to M2 capacity. The contract became effective December 1,

19 2005 and will remain in effect until October 31, 2015.

20

21 Q. What was the reason for entering into this contract?

22 A. The capacity serves as "bridge" capacity to help transport gas to PECO's city gate

23 from the delivery points of its existing storage contract with PEPL. By way of

1 background, in order to reach PECO's city gate, gas withdrawn from PEPL

2 storage must be transported on various legs of transportation capacity. First, the

3 withdrawn storage gas is transported on PECO's EFT contract with PEPL to an

4 interconnect with TETCO on the Lebanon Lateral. The gas is then transported

5 from the Lebanon Lateral to Texas Eastern's main line at M2 on PECO's LLFT

6 contract with Texas Eastern. Prior to entering into this M2 to IVI2 contract, PECO

7 would bid every year to acquire M2 to M2 capacity to get the gas to Uniontown,

8 where the gas was finally delivered to PECO's city gate on PECO's FLEX X

9 contract. The new M2 to M2 contract described above is intended to replace

10 PECO's need to bid on that capacity annually, and provides significantly more

11 reliability to our supply plan.

12

13 Q. Did PECO renegotiate any existing storage or transportation contracts since

14 PGC 2005?

15 A. Yes. PECO re-negotiated a slight increase to capacity on its LLFT contract with

16 PEPL. The change increased capacity from 29,913 dth to 30,487 dth for

17 December through March of each year and increased capacity for April through

18 November from 14,165 dth to 14,739 dth. This increase allows PECO to deliver

19 its full FLEX X contract quantity of 29,210 dth to its city gate, when applying

20 Texas Eastern's fuel retainage on the upstream transportation contracts.

21

22

1 Q. Does that conclude your testimony regarding PECO's natural gas pipeline

2 contracts?

3 A. Yes.

4

5 High Volume Transportation Program Information

6

7 Q. Please describe the high volume transportation program

8 A. Under the high volume transportation (HVT) program, large commercial and

9 industrial customers of PECO may purchase natural gas from an NGS for

10 transport on the PECO system. The rules of the HVT program are set forth in

11 PECO's Gas Service Tariff.

12

13 Q. What information is contained in Section 10 of the Advance Information?

14 A. Section 10 of the Advance Information includes a copy of the form PECO Gas

15 Transportation Service Agreement for large commercial and industrial customers

16 electing to participate in the HVT program.

17

18 Q. What information is listed in Sections 11 and 12 ofthe Advance

19 Information?

20 A. Section 11 of the Advance Information includes a report reflecting specific

21 contract information for each HVT customer. Specifically, it provides the

22 customer's rate; size category (greater than or less than 18,000 mcf per year);

23 daily transportation contract quantity; firm standby sales quantity, if any; and the

1 commodity rate. Section 12 of the Advance Information provides the monthly

2 transportation volume for each transportation customer for each month beginning

3 April 1, 2005 and ending March 31, 2006. Specifically, the following information

4 is provided for each customer: customer's rate; the total monthly deliveries in mcf

5 for that customer for each month beginning April 1, 2005 through March 31,

6 2006; and the total transportation deliveries for that customer for the full 12

7 month time period. Because this information is so voluminous, PECO does not

8 provide it to all parties with the Advance Information but will provide it upon

9 request. PECO is providing the full report to the Office of Trial Staff in response

10 to a formal discovery request.

11

12 Q. What is the purpose of Section 14 of the Advance Information?

13 A. Section 14 of the Advance Information is where PECO would describe any rate

14 structure or rate allocation changes for this 1307(f) filing if it were making any.

15 PECO has not proposed any such changes in this proceeding.

16

17 Q. Does that conclude your testimony regarding PECO's HVT program?

18 A. Yes.

19

20

10

1 Legal Proceedings Regarding the November 24, 2004 Dominion Reporting Error

2

3 Q. Please provide a summary of all the legal proceedings of which you are

4 aware against DTI and/or PECO's suppliers to recover any excess natural

5 gas charges caused by DTI's November 24, 2004 storage reporting error.

6 A. The only proceeding of which I am aware is a class action suit brought against

7 DTI and its parent. Dominion Resources Inc., by Virginia and West Virginia

8 residential ratepayers in the Circuit Court of Kanawha County, West Virginia

9 (Civil Action No. 05-C-351). PECO has not actively participated in that case but

10 has been monitoring its activity. The lawsuit was removed from the state court in

11 July, 2005 and assigned to Judge John T. Copenhaver, Jr. in the United States

12 District Court for the Southern District of West Virginia (Charleston) at Civil

13 Docket No. 2:05-cv-00548. There has been no activity of record in that docket

14 since September 2005, and no final order has been issued.

15

16 Q. What have you done to determine if any other proceedings have been

17 brought as a result of the Dominion Reporting Error?

18 A. As part of my normal job duties, I regularly read several industry publications,

19 including the Gas Daily, Foster's Natural Gas Report and Inside FERC. I have

20 not seen any articles in these or other industry publications that reported on any

21 legal proceedings brought as a result of the November 2004 reporting error. The

22 FERC's Office of Market Oversight and Investigation (OMOI) conducted a

23 thorough investigation of the incident and concluded that it was the result of a

11

1 clerical error and no Dominion trader had any improper, advance knowledge of

2 the reporting error. The FERC did not take any action against DTI. In addition,

3 our legal counsel has conducted legal research to determine if any other action has

4 been brought in any state or federal courts or administrative agencies as a result of

5 the DTI reporting error and has found no evidence of any other proceedings.

6 Programs to Monitor and Reduce Lost and Unaccounted for Gas

7

8 Q. Please provide a summary of PECO's programs to monitor and reduce lost

9 and unaccounted for gas.

10 A. PECO has several programs that contribute to our consistently reasonable lost and

11 unaccounted for gas figures. First, we have a proactive risk-based cast iron main

12 replacement program that has been validated by industry experts. The program

13 targets and prioritizes higher risk sections of cast iron main for replacement.

14 Second, PECO has programs to replace bare steel mains and services which lack a

15 protective exterior coating typical of all newer pipe installations. Replacements of

16 bare steel mains are validated through an engineering model known as Optimain,

17 which accounts for leak history, customer complaints, future highway projects, and

18 ongoing maintenance costs, among other things. PECO's proactive bare steel

19 services program was initiated in 2003 and targets geographic areas where either

20 leak rates are increasing or there are known water infiltration problems. Third,

21 PECO has an effective leak survey program in place that utilizes the latest

22 approved technology and ensures regulatory compliance. To improve efficiency

12

1 and cost effectiveness, PECO uses such practices as remote reporting, shift crews

2 and a "fix-it-now" philosophy, which contribute to our ability to maintain our

3 infrastructure. All of these PECO programs incorporate the use of cutting edge

4 technology to increase efficiency and reliability to our customers, and to cut down

5 on leaks and unplanned outages. Finally, PECO has a top rate odor response

6 program that has consistently benchmarked in first quartile against industry peers.

7

8 Q. What other measures does PECO take to keep its lost and unaccounted for

9 gas at a reasonable level?

10 A. PECO has a Damage Prevention Department, the sole purpose of which is to

11 reduce the number of damage incidents to PECO's gas and electric facilities. The

12 team ensures safe excavation for contractors and homeowners around PECO

13 underground facilities. Additionally, PECO operates its distribution system at the

14 lowest safe and reliable operating pressure possible, which reduces the amount of

15 gas lost through leaks.

16 Q. Does this conclude your testimony?

17 • A. Yes.

13

fl COMMONWEALTH OF PENNSYLVANIA

DATE: June 6, 2006

SUBJECT: R-00061501

TO: Office of Administrative Law Judge

FROM: James J. McNulty, Secretary

DOCUMENi FOLDER

Peco Energy Company Annual 1307(f) Filing

Attached please find a copy of Peco Energy Company's Annual 1307(f) filing, which has been captioned and docketed to the above referenced number.

This matter is assigned to your Office for appropriate action.

Enclosures

cc: Office of Trial Staff Bureau of Fixed Utility Services

JUN 06 2006

MP. 9> McNees Wallace & N u r i c k ^ /

attorneys at law

June 6, 2005

%

CHARIS MINCAVAGE DIRECT DIAL: (717) 237-5437 E-MAIL ADDRESS: cMiNCAVAGE(5>MWN.cQiiK

/ 0 A

James J. McNulty, Secretary VIA HAND DELIVERY Pennsylvania Public Utility Commission Commonwealth Keystone Building 400 North Street, 2nd Floor Harrisburg, PA 17120

RE: Pennsylvania Public Utility Commission v. PECO Energy Company; Docket No. R-00061501

Dear Secretary McNulty:

Enclosed for filing with the Commission are the original and three (3) copies of the Philadelphia Area Industrial Energy Users Group's ("PAIEUG") Petition to Intervene in the above-referenced proceeding.

As shown by the attached Certificate of Service, all parties to this proceeding are being duly served. Please date stamp the extra copy of this transmittal letter and kindly return it for our filing purposes.

Very truly yours,

McNEES WALLACE & NURICK LLC

J

By

Counsel to Philadelphia Area Industrial Energy Users Group

CM/lhi Enclosures c: Honorable Veronica Smith, Chief Administrative Law Judge (via hand delivery)

Certificate of Service

RO. Box 1166 • 100 PINE STREET • HARRISBURG, PA 17108-1166 • TEL: 717.232.8000 • FAX: 717.237.5300 • WWW.MWN.COM

HAZLETON, PA • LANCASTER, PA • STATE COLLEGE, PA « COLUMBUS, OH • WASHINGTON, DC

BEFORE THE PENNSYLVANIA PUBLIC UTILITY COMMISSION


v.

PECO ENERGY COMPANY

% o


PETITION TO INTERVENE

TO THE HONORABLE, THE PENNSYLVANIA PUBLIC UTILITY COMMISSION:

Pursuant to the provisions of 52 Pa. Code §§ 5.71 - 5.74, the Philadelphia Area Industrial

Energy Users Group ("PAIEUG") hereby files this Petition to Intervene in the above-captioned

proceeding. In support thereof, PAIEUG states as follows:

1. Petitioner is the Philadelphia Area Industrial Energy Users Group ("PAIEUG").

The composition of PAIEUG at this point in time is attached hereto as Appendix "A." Appendix "A"

will be updated as necessary.

2. The names and address of Petitioner's attorneys are:

OCUMENT FOLDER

David M. Kleppinger Charis Mincavage McNEES WALLACE & NURICK LLC 100 Pine Street P.O. Box 1166 Harrisburg, PA 17108-1166 Phone: (717) 232-8000 Fax: (717) 237-5300

NOV 1 5 2006

{7\ D fa

0) m 3. On April 28, 2006, PECO Energy Company ("PECO" or "Company") made its

preliminary Purchased Gas Cost ("PGC") filing with the Pennsylvania Public Utility Commission

("PUC" or "Commission"), pursuant to Section 1307(f) ofthe Public Utility Code, 66 Pa. C.S.

§ 1307(f). On June 1, 2006, PECO submitted supporting testimony setting forth the Company's

proposed gas recovery rates, effective for services rendered on and after December 1, 2006.

4. PAIEUG is an ad hoc group of energy-intensive customers receiving transportation

related services from PECO, including service under Rate TS-I (Gas Transportation Service -

Interruptible) and Rate TS-F (Gas Transportation Service - Firm). PAIEUG members use

substantial volumes of natural gas in their manufacturing and operational processes, and these natural

gas costs are a significant element of their respective costs of operation.

5. PAIEUG is concerned with issues regarding the nature of firm and interruptible

transportation delivery service, pipeline capacity cost assignment, penalty charges, and daily and

monthly imbalancing penalties. The Commission's final disposition of PECO's 1307(f) filing may

have an impact upon the rates PAIEUG members pay for natural gas service.

6. Therefore, consistent with 52 Pa. Code § 5.72(a), PAIEUG has a significant interest in

this proceeding that is not represented by any other party of record. Accordingly, PAIEUG should be

granted intervener status in this proceeding.

0) # WHEREFORE, the Philadelphia Area Industrial Energy Users Group respectfully request

that the Commission grant this Petition to Intervene and provide PAIEUG with ftill party status.

Respectfully submitted,

McNEES WALLACE & NURICK LLC

By_ 3^-W)avid M. Kleppinger /

Charis Mincavage 100 Pine Street P.O. Box 1166 Harrisburg, PA 17108-1166 Phone: (717) 232-8000 Fax:(717) 237-5300

Counsel to the Philadelphia Area Industrial Energy Users Group

Dated: June 6, 2006

AFFIDAVIT

COMMONWEALTH OF PENNSYLVANIA ) ) ss:

COUNTY OF DAUPHIN

%> % ^

Charis Mincavage, being duly sworn according to law, deposes and says that she is counsel to

the Philadelphia Area Industrial Energy Users Group, and that in this capacity she is authorized to

and does make this affidavit for them, and that the facts set forth in the foregoing Petition to

Intervene are true and correct to the best of her knowledge, information and belief

is Mincavagt

SWORN TO and subscribed

before me this Lp day

of June, 2006.

V flCUUT (Jl .k l i fU^ Notary Public /

(SEAL)

NOTARIAL SEAL MARYAS1PE

Notary Public CITY OF HARRISBURG, DAUPHIN COUNTY My Commission Expires Mar 19, 2009

A P P E N D I X "A"

PHILADELPHIA AREA INDUSTRIAL ENERGY USERS GROUP

Air Liquide Industrial U.S. LP The Boeing Company Buckeye Pipe Line Company, L.P. ConocoPhillips Trainer Refinery Franklin Mills Associates Limited Partnership GlaxoSmithKline Jefferson Health System Kimberly-Clark Corporation Merck & Co., Inc. Rohm and Haas Company Saint Joseph's University

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CERTIFICATE OF SERVICE

I hereby certify that I am this day serving a true copy of the foregoing document upon the

participants listed below in accordance with the requirements of Section 1.54 (relating to service by a

participant).

VIA FIRST-CLASS MAIL

Stephen Keene, Esq. Office of Consumer Advocate Forum Place, Sth Floor 555 Walnut Street Harrisburg, PA 17101-1923

William Lloyd, Esq. Office of Small Business Advocate Suite 1102, Commerce Bldg. 300 North Second Street Harrisburg, PA 17101

Thomas P. Gadsden, Esq. Anthony C. DeCusatis, Esq. Morgan, Lewis & Bockius, LLP 1701 Market Street Philadelphia, PA 19103

Johnnie Simms, Esq. Office of Trial Staff Pennsylvania Public Utility Commission The Commonwealth Keystone Building 400 North Street, 2 n d Floor Harrisburg, PA 17120

Shari C. Gribbin, Esq. Assistant General Counsel Exelon Business Servcies Company 2301 Market Street S23-3 Philadelphia, PA 19101-8699

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Dated this 6 t h day of June, 2006 in Harrisburg, Pennsylvania.

m O rn rrj

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( A l M O N W E A L T H OF PENNSYLV0IA >JNSYLVANIA PUBLIC UTILITY COMMISS p i l i p PENN^VLVANIA PUBLIC UTILITY COMMISSION

•^^V Office of Administrative Law Judge IN REPLY PLEASE

— p.o. BOX 3265, HARRISBURG, PA 17105-3265 REFERTOOURF,LE

. June 6, 2006

In Re: R-00061501

(SEE ATTACHED LIST)

PECO Energy - Gas D i v i s i o n

1307( f )

N O T I C E

This is to inform you that a prehearing conference on the above-captioned case will be held as follows:

Type: Initial Telephonic Pre-Hearing Conference

Date: Friday, June 16, 2006

Time: 10:00 a.m.

Loca t ion : I n an a v a i l a b l e hear ing room P h i l a d e l p h i a Sta te O f f i c e B u i l d i n g Broad and Spr ing Garden S t ree t s P h i l a d e l p h i a , PA 19130

Hearing Room 5 - Har r i sburg Area P a r t i e s Plaza Level Commonwealth Keystone B u i l d i n g 400 North S t ree t H a r r i s b u r g , PA 17120

Presiding.: A d m i n i s t r a t i v e Law Judge Herbert Smolen 1302 Ph i l ade lph ia S ta te O f f i c e B u i l d i n g 1400 West Spr ing Garden S t ree t P h i l a d e l p h i a , PA 19130 Telephone: 215.560.2105 Fax: 215.560.3133

#389788 rev 11/03

I f you are jfl|)erson with a d i s a b i l i t y , f ^ J you wish to attend the hearing, we may be able to make arrangements for your special needs. Please call the scheduling office at the Public U t i l i t y Commission at least (2) two business days prior to your hearing:

• Scheduling Office: 717.787.1399 • AT&T Relay Service number for persons who are deaf or

heari ng-i mpaired: 1.800.654.5988

pc: Judge Smolen June Perry - LA, Keystone 3NW Cyndi Page - BPL, Keystone 3NE FUS, Keystone 3W Cherie Pyle, Scheduling Officer Beth Plantz Docket Section Calendar File

#389788 rev 11/03

#

R-08Q615Q1 PECO ENERGY - GAS DIVISION 1397(R

ALLISON A CURTIN ESQUIRE OFFICE OF TRIAL STAFF PO BOX 3265 2 WEST KEYSTONE HARRISBURG PA 17105-3265

ANTHONY C DECUSATIS ESQUIRE MORGAN LEWIS & BOCKIUS LLP 1701 MARKET STREET PHILADELPHIA PA 19103-2921

BRIAN D CROWE DIRECTOR RATES/REG AFFAIRS PECO ENERGY COMPANY 2301 MARKET STREET PHILADELPHIA PA 19103

IRWIN A POPOWSKY ESQUIRE OFFICE OF CONSUMER ADVOCATE 555 WALNUT STREET 5TH FLOOR FORUM PLACE HARRISBURG PA 17101-1923

WILLIAM R LLOYD JR ESQUIRE OFFICE OF SMALL BUSINESS ADVOCATE 1102 COMMERCE BUILDING 300 NORTH 2ND STREET HARRISBURG PA 17101


Pennsylvania Public Utility Commission

v.

PECO Energy Company 1307(f) Proceeding


I hereby certify that I have this day served a true copy of the foregoing document, the

Office of Consumer Advocate's Interrogatories Set I , upon parties of record in this proceeding in

accordance with the requirements of 52 Pa. Code § 1.54 (relating to service by a participant), in the

manner and upon the persons listed below:

Dated this 14,h day of June 2006.

SERVICE BY E-MAIL and INTEROFFICE MAIL

Allison A. Curtin, Esquire Office of Trial Staff Pennsylvania Public Utility Commission Commonwealth Keystone Building 400 North Street Harrisburg, PA 17105-3265 Counsel For: Office of Trial Staff

SERVICE BY E-MAIL and FIRST CLASS MAIL

Thomas P. Gadsden, Esquire Anthony C. DeCusatis, Esquire Morgan, Lewis, & Bockius, LLP 1701 Market Street Philadelphia, PA 19103 Counsel For: PECO Energy Company

CO

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Brian D. Crowe Director of Rates and Regulatory Affairs PECO Energy Company 2301 Market Street Philadelphia, PA 19103 For: PECO Energy Company

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Shari C. Gribbin, Esquire Exelon Business Services Corporation 2301 Market Square Suite 2300 Philadelphia, PA 19103 Counsel For: Exelon Business Services Corporation

Daniel G. Asmus Assistant Small Business Advocate Office of Small Business Advocate Commerce Building - Suite 1102 300 North Second Street Harrisburg, PA 17101 Counsel For: Office of Small Business Advocate

Stephen J. Keene Senior Assistant Consumer Advocate PA Attorney I.D. #70279 E-Mail: [email protected] Aron J. Beatty Assistant Consumer Advocate PA Attorney I.D. #86625 E-Mail: [email protected]

Counsel for Office of Consumer Advocate 555 Walnut Street 5th Floor, Forum Place Harrisburg, PA 17101-1923 Phone: (717) 783-5048 Fax: (717) 783-7152 00089288.DOC

4» BEFORE THE



v.

PECO Energy-Gas Division 1307(f)


NOTICE OF APPEARANCE

TO THE SECRETARY:

Please enter the appearance of the Office of Trial Staff of the Pennsylvania

Public Utility Commission in the above-captioned proceeding.

be:

Prosecutor(s) for the Office of Trial Staff, in addition to the undersigned will

ALLISON A. CURTIN, ESQUIRE

All service on and communications to the Office of Trial Staff in this

proceeding should be addressed:

DOCUMENT FOLDER

/ JUN 0 7 2006

Dated: May 15, 2006

Allison A. Curtin, Esquire Pa. Public Utility Commission Office of Trial Staff P.O. Box 3265 Harrisburg, PA 17105-3265 [email protected] (717) 787-1976

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Johnnie imms Chief Prosecutor

A

<0 9 BEFORE THE



v.

PECO Energy-Gas Division 1307(f)



I hereby certify that I am serving the foregoing Notice of Appearance,

dated May 15, 2006, either personally, by first class mail, electronic mail, express mail

and/or by fax upon the persons listed below:

Brian D. Crowe, Dir. Rates/Reg. Affairs PECO Energy Company 2301 Market Street Philadelphia, PA 19103

Irwin A. Popowsky, Esquire Office of Consumer Advocate 555 Walnut Street, 5 th Floor Harrisburg, PA 17101-1923

William R. Lloyd, Jr., Esquire Office of Small Business Advocate rn Suite 1102, Commerce Building 300 North Second Street ^ Harrisburg, PA 17101 ^

rn ^

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cr. cn

<D> ft Hon. Veronica A. Smith Chief Administrative Law Judge Pennsylvania Public Utility Commission P.O. Box 3265 Harrisburg, Pa 17105-3265

fohnnie E./Simms Chief Prosecutor Office of Trial Staff

Dated: May 15,2006 DocketNo. R-00061501

Morgan, Lewis & Bockius LLP 1701 Market Street Philadelphia, PA 19103-2921 Tel: 215.963.5000 Fax: 215.963.5001 www.morganlewis.com

1 AJ

Morgan Lewis C O U N S E L O R S A T L A W

Anthony C. DeCusat is Of Counsel 215.963.5034 [email protected]

June 15 2006

DOCUMENT FOLDER JUN i $ 2006

PA PUBLIC UnUTV COMMISSION VIA OVERNIGHT DELIVERY

James J. McNulty, Secretary Pennsylvania Public Utility Commission Commonwealth Keystone Building 400 North Street Harrisburg, PA 17120

Re: Pa. P.U.C. v. PECO Energy Company Docket No. R-00061501


Enclosed for filing in the above-captioned matter are an original and three copies of the Prehearing Memorandum of PECO Energy Company. An additional copy of this letter and the Prehearing Memorandum are enclosed, which we request be date-stamped and returned to us in the enclosed stamped, self-addressed envelope.

Copies of the Prehearing Memorandum have been served upon the presiding Administrative Law Judge and upon the other persons as indicated on the Certificate of Service attached to the original and each copy of the Prehearing Memorandum.

Very truly yours,

atis

ACD/jae

Enclosures c: Per Certificate of Service

Philadelphia Washington New York Los Angeles San Francisco Miami Pittsburgh Princeton Chicago Palo Alto Dallas Harrisburg Irvine Boston London Paris Brussels Frankfurt Beijing Tokyo 0\

l-PH/2440017.1

THE PENNSYLVANIA PUBLIC UTILITY COMMISSION

PENNSYLVANIA PUBIC UTILITY COMMISSION

v. Docket No. R-00061501

PECO ENERGY COMPANY

RECEIVED PREHEARING MEMORANDUM

OF I 5 20Qi PECO ENERGY COMPANY

WPJ^UJILIIV COMMISSION

TO ADMINISTRATIVE LAW JUDGE HERBERT SMOLEN:

This memorandum is submitted in response to a Notice of Prehearing Conference, dated

June 6, 2006, and the regulations of the Pennsylvania Public Utility Commission (Commission)

at 52 Pa. Code § 5.222(d)(i).

I. INTRODUCTION

This proceeding involves PECO Energy Company's (PECO or the Company) annual

purchased gas cost filing under Section 1307(f) of the Pennsylvania Public Utility Code (66 Pa.

C.S. § 1307(f)). As required by the Commission's regulations at 52 Pa. Code §53.64(a) and (c)

and the 2006 Schedule of Filing Dates published at 35 Pennsylvania Bulletin 4692, PECO filed

advance information (Advance Information) concerning its purchased gas costs on April 28,

2006. On June 1, 2006, PECO filed Supplement No. 59 to its Tariff Gas - Pa. PUC No. 2

(Supplement No. 59) proposing tariff rate changes. Accompanying this filing, PECO included

statements showing the calculation of the proposed purchased gas cost rates to become effective

December 1, 2006 and supporting written direct testimony of PECO's witnesses, all of which are

described in more detail hereafter.

!-PH/2438762.!

' The proposed changes to the Commodity Charge (CC), Gas Cost Adjustment Charge

(GCA), and the Balancing Service Charge (BSC), as set forth in Supplement No. 59 and

accompanying supporting data, are as follows:

Current Proposed (Per mcf) (Per mcf)

CC $9.7095 $11.0260

GCA $1.5245 ($0.0356)

BSC $0.4552 $0.4329

Total $11.6892 $11.4233

In accordance with the Commission's Order entered on December 6, 1985 at Docket No. P-

00850081, PECO initiated the advance public notice of Supplement No. 59 and accompanying

supporting data through bill inserts and newspaper advertisements.

By its Notice dated June 6, 2006, the Commission informed the parties that it had

assigned this proceeding to Administrative Law Judge Herbert Smolen and scheduled a

Prehearing Conference for June 16, 2006.

II. STATEMENT OF ISSUES

In this case, as in every proceeding under Section 1307(f) of the Public Utility Code, the

primary issue is the justness and reasonableness of the natural gas distribution company's

(NGDC) proposed purchased gas cost rates. In addressing this issue, the Commission is required

to investigate and determine whether the NGDC is pursuing "a least cost fuel procurement

policy, consistent with the utility's obligation to provide safe, adequate and reliable service to its

customers." In order to reach such a determination, the Commission is required to make the

specific findings set forth in Section 1318 (a) and (b) of the Public Utility Code (66 Pa.C.S

§1318(a) and (b)), and such further findings, i f any, as may be required under provisions ofthe

l-PH/2438762.1 2

^ Natural Gas Choice and Competition Act (66 Pa. C.S. Ch. 22). As set forth below, the testimony

and other supporting data submitted by PECO address these matters and provide adequate and

sufficient evidence to support all ofthe findings the Commission is required to make to approve

PECO's proposed purchased gas cost rates.

I I I . WITNESSES

As previously explained, on April 28, 2006, PECO submitted its Advance Information.

That filing consists of Sections 1 through 22, which respond to specific information requests set

forth in the Commission's regulations at 52 Pa. Code §53.64. Additionally, and as also

previously explained, on June 1, 2006, PECO filed Supplement No. 59 and the further supporting

data required by the Commission's regulations to be filed at that time. That filing includes the

following:

Statement No. 1: A table showing pricing under PECO's PGC No. 22-Q2 and its proposed PGC No. 23.

Statement No. 2: The computation of PECO's proposed CC and GCA.

Statement No. 3: The computation of PECO's BSC.

In addition, as part of its June 1, 2006 filing, PECO submitted the written direct

testimony of three initial witnesses, which are marked for identification as Statement Nos. 4, 5

and 6. The names and job titles of these witnesses are listed below together with a brief

summary of the subject matter of their testimony:

1. Anthony P. DiFelice. Mr. DiFelice is a Senior Engineer in PECO's Rates and Regulatory Affairs Division. His direct testimony is set forth in PECO Statement No. 4 and describes the development of the purchased gas cost rates set forth in Supplement No. 59. Mr. DiFelice is sponsoring Statement Nos. 1, 2, and 3 of PECO's June 1, 2006 filing and Exhibit APD-1, which consists of clean and blacklined versions of Supplement No. 59.

2. Eric G. Helt. Mr. Helt is the Manager of the Acquisition and Planning Group of PECO's Gas Division. His direct testimony is set forth in PECO Statement No. 5 and describes and supports the cost estimates used to calculate the

I-PH/243S762.1 3

purchased gas cost rates set forth in Supplement No. 59. He is sponsoring Sections 1, 3, 4, 6, 7, 8, 9, 13, 15, 16, 17, 18, 19, 20, 21, and 22 of PECO's Advance Information.

3. Amy E. Hamilton. Ms. Hamilton is the Manager of Gas Regulations and Transportation Services for PECO's Gas Division. Her direct testimony is identified as PECO Statement No. 6. Ms. Hamilton is sponsoring Sections 2, 5, 10, 11, 12 and 14 of the Advance Information.

PECO may propose to use additional witnesses in rebuttal of the direct testimony of other

parties. However, such witnesses cannot be identified until other parties file their testimony and

the issues raised in that testimony have been evaluated.

IV. PROPOSED SCHEDULE

PECO proposes the following schedule for this proceeding:

Prehearing Conference: June 16

Direct Testimony of Other Parties: July 14

Rebuttal Testimony: August 7

Surrebuttal Testimony: August 14

Hearings: August 17-18

Main Brief: September 1

Reply Brief: September 11

PECO proposes that all testimony dates may be satisfied with an e-mail or fax copy of the

testimony and accompanying exhibits, with a hard copy of the testimony and exhibits being

served by first class U.S. mail.

V. POSSIBILITY OF SETTLEMENT

In the past several PGC proceedings, the parties have settled all or virtually all issues

arising out of PECO's Section 1307(f) purchased gas cost filings. Therefore, PECO views

settlement in this case as a distinct possibility. Once the parties have analyzed the Company's

filing, PECO will develop a settlement offer and meet with the parties to attempt to reach a

l-PH/2438762.1

<0

mutually agreeable resolution.

VI. CONCLUSION

Based on the evidence described above, PECO submits that the rates proposed in

Supplement No. 59 are just, reasonable and lawful. Additionally, and as explained previously,

PECO remains open to settling issues and concerns raised by other parties on fair and reasonable

terms.

Respectfully submitted,

/ ^ h c O ENERGY COMPANY

Shari Gribbiir Assistant General CAunsel Exelon Business Services Company 2301 Market Street, S23-1 Philadelphia, PA 19103 215.841.4941 215.568-3389(Fax) shari. [email protected]

Thomas P. Gadsden 215.963.5234 [email protected] Anthony C. DeCusatis 215.963.5034 adecusatis(a),morganlewis.com Morgan, Lewis & Bockius LLP 1701 Market Street Philadelphia, PA 19103 215.963.5001(Fax)

Counsel For PECO Energy Company

Dated; June 15,2006

l-PH/2438762.1

<0


PENNSYLVANIA PUBIC UTILITY COMMISSION

v.

PECO ENERGY COMPANY

RECEIVED JUN 1 5 2006



I hereby certify that I am this day serving copies ofthe foregoing document upon the

persons and in the manner indicated below which service satisfies the requirements of 52 Pa.

Code § 1.54 (relating to service by a participant).

VIA ELECTRONIC AND FEDERAL EXPRESS

Honorable Herbert Smolen Administrative Law Judge Pennsylvania Public Utility Commission 1302 Philadelphia State Office Building Broad and Spring Garden Streets Philadelphia, PA 19130

Stephen J. Keene, Esquire Aron J. Beatty, Esquire Office of Consumer Advocate 555 Walnut Street Forum Place, 5th Floor Harrisburg, PA 17101-1923

Charis Mincavage, Esquire McNees Wallace & Nurick 100 Pine Street Harrisburg, PA 17108-1166

Johnnie E. Simms, Esquire Allison Curtin, Esquire Office of Trial Staff Pennsylvania Public Utility Commission Commonwealth Keystone Building 400 North Street, 2nd Floor West Harrisburg, PA 17105-3265

Daniel G. Asmus, Esquire Assistant Small Business Advocate Office of Small Business Advocate Suite 1102, Commerce Building 300 North Second Street Harrisburg, PA 17101

Charles T. Weakley Office of Trial Staff Pennsylvania Public Utility Commission Commonwealth Keystone Building 400 North Street, 2nd Floor West

risburg, PA 17105-3265

Dated: June 15,2006 Counsel for PECO Energy Company

l-PH/2438762.1

COMMONWEALTH OF PENNSYLVANIA

IRWIN A. POPOWSKY Consumer Advocate

OFFICE OF CONSUMER ADVOCATE 555 Walnut Street. Sth Floor. Forum Place Harrisburg, Pennsylvania 17101-1923

(717) 783-5048 800-684-6560 (in PA only)

FAX (717) 783-7152 consumer@paoca .org

June 15,2006

James J. McNulty Secretary PA Public Utility Commission Commonwealth Keystone Building 400 North Street Harrisburg, PA 17105-3265

DOCUMENT

RE: Pennsylvania Public Utility Commission

v. PECO Energy Company 1307(f) Proceeding DocketNo. R-00061501


Enclosed please find for filing an original and three (3) copies of the Office of Consumer Advocate's Notice of Appearance, in the above-captioned proceeding.

Copies have been served upon all parties of record as shown on the attached Certificate of Service.

Sincerely,

Aron J/Beatty Assistant Consumer Advocate PA Attorney I.D. #86625

Enclosures cc: All parties of record

Chief Administrative Law Judge 00089303.DOC

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Pennsylvania Public Utility Commission v.

PECO Energy Company, 1307(f) Proceeding DocketNo. R-00061501

NOTICE OF APPEARANCE DOCUlvlENT

Please enter my appearance in the above-designated matter on behalf of Office of

Consumer Advocate. I am authorized to accept service on behalf of said participant in this matter.

[CHECK ONE]

X . On the basis of this notice, I request a copy of each document hereafter issued by the

Commission in this matter.

. I am already receiving or have access to a copy of each document issued by the

Commission in this matter (alone, or in a consolidated proceeding) and do not on the basis of this

notice require an additional copy.

Respectfully Submitted,

JAN 1 1 Z007

Stephafi J. Keene Senior Assistant Consumer Advocate PA Attorney I.D. # 70279 E-Mail: [email protected] Aron J. Beatty Assistant Consumer Advocate PA Attorney I.D. # 86625 E-Mail: [email protected]

Counsel for: Irwin A. Popowsky Consumer Advocate

Office of Consumer Advocate 555 Walnut Street 5th Floor, Forum Place Harrisburg, PA 17101-1923 Phone:(717)783-5048 Fax:(717)783-7152 Dated: June 14, 2006

GO r o GO

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cn

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II CERTIFICATE OF SERVICE


v.

PECO Energy Company 1307(f) Proceeding


I hereby certify that I have this day served a true copy of the foregoing document, the

Notice of Appearance of the Office of Consumer Advocate, upon parties of record in this proceeding

in accordance with the requirements of 52 Pa. Code § 1.54 (relating to service by a participant), in

the manner and upon the persons listed below:

Dated this 15 t h day of June 2006.

SERVICE BY E-MAIL and INTEROFFICE MAIL m C -

Allison A. Curtin, Esquire Office of Trial Staff Pennsylvania Public Utility Commission Commonwealth Keystone Building 400 North Street Harrisburg, PA 17105-3265 Counsel For: Office of Trial Staff

m

SERVICE BY E-MAIL and FIRST CLASS MAIL

Thomas P. Gadsden, Esquire Anthony C. DeCusatis, Esquire Morgan, Lewis, & Bockius, LLP 1701 Market Street Philadelphia, PA 19103 Counsel For: PECO Energy Company

Brian D. Crowe Director of Rates and Regulatory Affairs PECO Energy Company 2301 Market Street Philadelphia, PA 19103 For: PECO Energy Company

11 #

Shari C. Gribbin. Esquire Exelon Business Services Corporation 2301 Market Square Suite 2300 Philadelphia, PA 19103 Counsel For: Exelon Business Services Corporation

Daniel G. Asmus Assistant Small Business Advocate Office of Small Business Advocate Commerce Building - Suite 1102 300 North Second Street Harrisburg, PA 17101 Counsel For: Office of Small Business Advocate

Stephefl'J. Keene Senio/Assistant Consumer Advocate PA Attorney I.D. # 70279 E-Mail: [email protected] Aron J. Beatty Assistant Consumer Advocate PA Attorney I.D. # 86625 E-Mail: [email protected]

Counsel for Office of Consumer Advocate 555 Walnut Street 5th Floor, Forum Place Harrisburg, PA 17101-1923 Phone: (717) 783-5048 Fax: (717) 783-7152 00089288.DOC

0) <sx$oe» P I N N S T I V A N I A

PUC mm vnuii <aunvH

COMMONWEALTH OF PENNSYLVANIA PENNSYLVANIA PUBLIC UTILITY COMMISSION

Office of Administrative Law Judge P.O. BOX 3265, HARRISBURG, PA 17105-3265

June 16, 2006

IN REPLY PLEASE REFER TO OUR RLE

In Re: R-00061501

(SEE LETTER DATED 6/6/06)

PECO Energy - Gas Division

1307(f)

Hearing Notice FOLDER

This is to inform you that a hearing on the above-captioned case w i l l be held as follows:

Type:

Date:

Time:

Location

Presiding:

Initial and Further Hearings

Thursday, August 17, 2006 Friday, August 18, 2006

10:00.a.m. Both Days

Hearing Room 2 Plaza Level Commonwealth Keystone Building 400 North Street Harrisburg, PA 17120

Administrative Law Judge Herbert Smolen 1302 Phi ladelphia State Of f ice Bui ld ing 1400 West Spring Garden Street Phi ladelphia, PA 19130 Telephone: 215.560.2105 Fax: 215.560.3133

.OCKETI JUN 2 7 2006

#387273 rev 04/05

0) • Attention: You may lose the case if you do not come to this

hearing and present facts on the issues raised.

I f you intend to f i l e exhibits, 2 copies of a l l hearing exhibits to be presented into evidence must be submitted to the reporter. An additional copy must be furnished to the Presiding Officer. A copy must also be provided to each party of record.

Individuals representing themselves do not need to be represented by an attorney. All others (corporation, partnership, association, trust or governmental agency or subdivision) must be represented by an attorney. An attorney representing you should fi l e a Notice of Appearance before the scheduled hearing date.

I f you are a person with a d i s a b i l i t y , and you wish to attend the hearing, we may be able to make arrangements for your special needs. Please call the scheduling office at the Public U t i l i t y Commission at least (2) two business days prior to your heari ng:

• Scheduling Office: 717.787.1399 • AT&T Relay Service number for persons who are deaf or

heari ng-i mpai red: 1.800.654.5988

pc: Judge Smolen June Perry - LA, Keystone 3NW Cyndi Page - BPL, Keystone 3NE FUS, Keystone 3W Cherie Pyle, Scheduling Officer Beth Plantz Docket Section Calendar F i l e

#387273 rev 04/05

OALJ Hearing Report

Do.cket No.: R-00061501

Please Those Blocks Which Apply

YES NO

Prehearing Held: 0 Case Name: PECO Energy Company - Gas Division Hearing Held:

Testimony Taken:

Transcript Due: 0

Location: Philadelphia, PA

Hearing Concluded:

Further Hearing Needed:

-Two DQYS - r Estimated Add'l Days:

Date: June 16, 2006 „ „ . ... . j - I U ^

RECORCrCtOSCD. • — - g ^ ^

ALJ: Herbert Smolen — J ^ DATE:

Briefs to be Filed:

Reporting Firm: Commonwealth Reporting DATE:

Bench Decision:

RECEIVED JUN 2 6 2006

PA PUBLIC UTILITY COMMISSION \WS BUREAU

REMARKS:

SKBETARY'S BUREAU PLEASE PRINT CLEARLY - Incomplete Information may result in delay of p rocessmg.

Name and Telephone Number Address Who are you representing?

Telephone: ̂ [ S A ^ h ^ V A City • ( ' E-mail Address:

State Zip

Fax Number: 2 , i 5 - S - 5 o 0 /

City State Zip

Telephone: E-mail Address: Fax Number:

City State Zip


Check this box ifaUditional parties or attendees appear on back of form.

Note: Completion of this fi

#194070

ion of this form does not cofistttntt a

Reporter's Signature

an entry of appearance, see 52 Pa. Code §§1.24 and 1.25.

, 1 6. 2006 1 0:15AM AOMIN-LAW-JUDGE HBG NO. 3081 P. 2

# OALJ Hearing Report Please ChSwlhose Blocks Which Apply

Docket No,: YES NO

Prehearing Held:

Case Name: -PSgB^38££&&fe± • . t t » ~ > ' i » i i i t * i i p > > l L > Hearing Held: •

U •Gorsumcr ActtfQcatOi'1=tDTi Testimony Taken: Transcript Due: w

w Hearing Concluded:

CT Location: HBG Further Hearing Needed;

Estimated Add'l Days: PA?* Date: June 16, 2006 i/n(oi» -t t fo loo - tfa*/?*

RECORD CLOSED:

ALJ: DATE:

Briefs to be Filed: • Reporting Firm: Commonwealth Reporting DATE:

Bench Decision: • REMARKS:

Name and Telephone Number Address Who are you representing?

f ^ v u - o - ^ ( c^c-

C-^£ ."-1 W ^ - ^ *

Zip

(nut Te]ephone:7f 7 . - 7 ^ 3 . 5 - 0 ^ E-mail Address; ^ ^ t + ^ ^ ^ o c * . . * ^

City Zip

Telephone: *7 n - T ft? • "zs-g"" E-mail Address; wMoy Fax Number: TH-TK? ~28J7

/OO Jlndos.-fr^l line**/

State

/ /

Zip

Jlndos.-fr^l line**/

Tdephone: 7/7. ^ 7 - 5 ^ 7 E-mail Address: cminQ^\f6^C (bffiW am Fax Number; 7/7-e3<37'5'3iJD LJ Check this box if additional parties or attendees appear on back of form.̂

Reporter's Signature

Atofe: Completion of this form does not constitute an entry of appearance, see 52 Pa. Code §§1.24 and 1.25.

#194070 rev 11/05

, JUN. 1 6. 2006 1 0:1 5AM ADMIN-LAW-JUDGE HBG NO. 3081 P. 3

Name and Telephone Number ^ Address Who are you representing?

Cit/ State

PA Zip

Telephone:777-"g3 - 7 ^ 8 - E-mail Addressir^j^y, jgsW-.pa-cS Fax Number: 7 / 7- 7 7 ^ ^ 7

City State

Telephone: E-mail Address: Fax Number

City State Zip

Telephone: E-mail Address: Fax Number.

City State Zip


City State Zip


City State Zip

Telephone: E-mail Address: Fax Number;

City Slate Zip


City Stale Zip

Telephone: E-mail Address: Fax Number; Note: Completion oftfiis form does not constitute an entry of appearance, see 52 Pa. Code §§1.24 and 135.

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