Calculation of BGS-CIEP Hourly Energy Price Component Using PJM Hourly Data for the PSE&G Transmission Zone

Transmission Capacity BGS-CIEP Rate Components – Terms New Jersey Sales and Use Tax and Losses are to be added where applicable. PJM Residual Metered Load Aggregate Locational Marginal Price (LMP) in PSEG zone (hourly charge is posted under Real Time LMP for PSEG zone on www.PJM.com) Customer will be billed the PJM price multiplied by the customer’s kWhr usage in the concurrent hour. BGS Energy See Tariff Sheet No. 82 for current charge Ancillary Services (charge based on PJM tariff) The BGS-CIEP rate is truly a cost-based marginal energy price. The principal component is the PJM LMP price, which is an hourly market energy price that reflects the cost to produce power for a given place in a given hour. The generation capacity was obtained in through the BGS auction, ancillary service and transmission capacity are based on PJM charges. The retail margin is the only component that is not cost base. It was set by the BPU to incent competition in the retail marketplace. I will discuss each in more detail. Generation Capacity See Tariff Sheet No. 82 for current charge Varies monthly, see Tariff Sheet No. 84 for current charge. Reconciliation Transmission Capacity (charge based on PJM Tariff) Transmission See Tariff Sheet No. 83 for current charge

BGS-CIEP Rate - Energy Components Real-Time Energy Market or PJM LMP Price The PJM load weighted average residual metered load aggregate locational marginal price (LMP) is a real-time spot market price (Prior to June 1, 2015, the PJM load weighted zonal average LMP was used). Customers on the BGS-CIEP rate will be billed the load-weighted hourly average price in the PSEG zone, as posted by PJM multiplied by that customer’s kWhr usage in the concurrent hour. The following charges are energy-related, are expressed in cents per kilowatt hour and will be billed based on all kilowatt hours consumed in a billing period. The most important charge to understand is the PJM LMP price. The PJM price is a real time spot market energy price. It changes at five-minute intervals. However, the rate that customers who stay on the BGS-CIEP rate will be charged is the load-weighted average price in the PSEG zone. Later in the presentation we will show you where you can find the real-time price. The LMP price that customers who remain on the BGS-CIEP rate will be charged will vary hourly. In general this price rises with increases in load as more expensive generating units are dispatched to meet the electric demands. The LMP price can vary anywhere between $0 per megawatt hour and $1000 per megawatt hour (or $1.00 kWh). In general it is much lower and ranges between 2.5 and 4.0 cents per kilowatt hour, but during times of very high demand, has gone as high as the $1000/mW limit. We will be showing you some historical data a little later. The next component of the BGS-CIEP rate is a Retail Margin Charge. This charge is 0.5 cents per kilowatt hour and is applied to all kWh. This charge was set by the BPU for all customers who stay on the BGS-CIEP rate. Since this charge is part of the BGS-CIEP rate, customers it will not be part the EDC bill for customers who go to a third party supplier. This is an important point to remember.

BGS-CIEP Rate - Energy Components (Continued) Ancillary Services Charge For PJM administrative charges and; Other generation-related items necessary for electric grid stability. Charge is an overall average of various PJM Tariff charges. BGS Reconciliation Charges Recovers the difference between monthly amount paid to BGS suppliers and the total revenue received from BGS customers for the preceding months for the applicable BGS supply. Charge changes each month, and can be positive or negative (e.g. a charge or a credit). The next component is the Ancillary service. For PSE&G this charge 0.19 cents per kilowatt hour. This EDC-specific PJM charge that is primarily for generation-related services need to help stabilize the grid. It includes thing like spinning reserve, where a generator is running their unit in a stand-by mode waiting for the signal to start putting energy into the grid. The final energy related charge is the BGS-reconciliation charge. This charge recovers differences what and EDC will pay a supplier for a given period. We expect this charge to be very very small. It can also be positive (a charge) or negative ( a credit). For CIEP customers, it will primarily cover some “true-ups” that occur between the EDC and PJM 30 days after the end of any month.

BGS-CIEP Rate – Capacity Components BGS Capacity Charges (Generation) Charges per kilowatt of Generation Obligation. The charge recovers generation capacity costs, based on customer’s allocated share of overall summer peak load on PJM system. BGS Transmission Charges Charges per kilowatt of Transmission Obligation. Recovers customer’s share of PSE&G transmission system costs, based on overall summer peak load for PSEG. Charge is set by PJM OATT (tariff). Subject to change periodically on the effective date of the PJM rate as approved by Federal Energy Regulatory Commission (FERC). All Charges subject to Sales and Use Tax (SUT) – where applicable The next couple of charges are demand or kW based. They are really no different than the Generation Capacity and Transmission charges on your current bills other than the rates for the charges will be somewhat lower than the rates in our current tariff. The BGS capacity charge is related to generation. For PSE&G BGS-CIEP customers, the monthly charge will be $1.93/kW times the customers generation obligation (expressed in kW). The capacity charge was the only component of the BGS-CIEP rate obtained in the auction. The generation obligation is set each January and is based on the customers average actual usage during the five highest hours PJM-system wide load. For a customer with a “normal” load factor of 50-60% this should be result in average monthly costs of about $0.3 cents per kWh. The BGS transmission charge is very similar to the generation capacity charge. For PSE&G customers, the monthly rate is $1.56/kW. The monthly charge will be this rate times the customers transmission obligation. This obligation is based the customers actual average usage during the five highest hours of PSE&G system wide load. Again for a customer with a “normal” load factor this charge should average out to be about $0.2 cents per kWh

Data Sources - Energy Price Data from PJM http://www.pjm.com Select markets & operations

Data Sources - Energy Price data from PJM Select Energy Market

Data Sources - Energy Price data from PJM Select: Hourly LMP - Settlements Verified Monthly LMP

Data Sources - Energy Price data from PJM PJM’s Data Miner 2 - Settlements Verified Hourly LMPs Select: Explore Data Set

PJM’s - Settlements Verified Hourly LMPs PSE&G Residual Aggregate Information for 6/1/19 Prices shown in dollars per megawatt-hour (use the “Total LMP Real Time” column for each hour) Select date range in “Datetime Beginning EPT” and End Date. Select Pricing Node ID: 116472957 or Pricing Node Name: PSEG_RESID_AGG. The applicable Hourly Rate can be found in the “Total LMP Real Time” column.