JOINT PETITION FOR FULL SETTLEMENT OF WEST PENN POWER COMPANY'S

RESTRUCTURING PLAN AND RELATED PROCEEDINGS DOCKET NO. R-009?3981

NOVEMBER 3, 1998

V

LEGAL SERVICES Allegheny Power 8 0 0 Cabin Hlil Drive Greencburg, PA 1 5 6 0 1 - 1 6 8 9 Phone: (7241 8 3 7 - 3 0 0 0 FAX: (7241 8 3 8 - 6 1 7 7

Wr i ter 's Direct Die) No. 724-836-6210

E-mail: jmun5ch@al leghenvpower.com

Novembers, 1998

HAND-DELIVERED

James J. McNulty, Secretary R E C F l V P P i Pennsylvania Public Utility Commission I — L / North Office Building, Room B20 ^..p Harrisburg, PA 17105-3265 t K " 1 2 0 0 4

Re: Application ofWest Penn Power Company for Approva^Qp^plJ^ COMMISSION of its Restructuring Plan under Section 2806 of the BUREAU Public Utility Code; Docket No. R-00973981

Dear Secretary McNulty:

Enclosed for filing are an original and eight (8) copies of the Joint Petition for Full Settlement of the Restructuring Plan of West Penn Power Company and Related Court Proceedings ("Joint Petition") in the above-captioned proceeding. Also enclosed are an original and eight (8) copies of accompanying Appendices to the Joint Petition.

Copies of the Joint Petition will be served on all of the participants in this

proceeding.

If you have any questions regarding the enclosed filing, please call.

Very truly yours,

J l ^ - ^ f - . — ^ hn L. Munsch

Attorney

Enclosures

cc: Certificate of Service

u:\jsheleh\rcsmjct\jtpetforsctimtlu\doc

BEFORE THE PENNSYLVANIA PUBLIC UTILITY COMMISSION

Pennsylvania Public Utility Commission

v. Docket No. R-00973981

Application of West Penn Power Company for approval of its Restrucmring Plan under Section 2806 of the Public Utility Code

CERTIFICATE OF SERVICE

I certify that I have served a true and correct copy of the foregoing upon the

following in accordance with 52 Pa. Code §1.54:

Alexander Galatic John Molinda Strategic Energy Limited Two Gateway Center Pittsburgh, PA 15222

Kevin J. McKeon, Esq. Malatesta. Hawke & McKeon LLP 100 North Tenth Street Harrisburg, PA 17101

Lisa M. Ochsenshirt, Esq. Office of Consumer Advocate 555 Walnut Street Forum Place. Floor Harrisburg, PA 17101-1921

Derrick P. Williamson, Esq. David M. Kleppinger, Esq. McNees, Wallace & Nurick P.O. Box 1166 100 Pine Street Harrisburg, PA 17108

Angela T. Jones. Esq. Office of Small Business Advocate Suite 1102, 300 North T* Street Harrisburg, PA 17101

Charles E. Thomas, Esq. Patricia Armstrong, Esq. John Alzamore. Esq. Thomas, Thomas, Armstrong & Niesen P.O. Box 9500 Harrisburg, PA 17108

Lauren S. McAndrews, Esq. Allegheny Teledyne Incorporated 1000 Six PPG Place Pittsburgh, PA 15222

Michael L. Kurtz, Esq. Armco, Inc. 2110 CBLD Center 36 East Seventh Street Cincinnati, OH 45202

Howard M. Louik, Esq. Allegheny County Law Department 300 Fort Pitt Commons 445 Fort Pitt Boulevard Pittsburgh, PA 15219

u: \jsheleh\resmict\compl tanceV 10-7-985crvlis .doc

Margaret Peters, Esq. The Peoples Natural Gas Company 625 Liberty Avenue Pittsburgh, PA 15222-3197

Rodney R. Akers, Esq. Assistant City Solicitor 313 City County Building 414 Grant Street Pittsburgh, PA 15219

Jim Selecky Brubaker & Associates, Inc. Regulatory and Economic Consultants Suite 208 1215 Fem Ridge Parkway St. Louis, MO 63141-2000

John Stember, Esq. Low Income Advocate Parties 1705 Allegheny Building 429 Forbes Avenue Pittsburgh, PA 15219

Steven L. Feld, Esq. First Energy Corporation 76 South Main Street Akron, OH 44308

Thomas J. Augspurger, Esq. MidCon Corporation Office of General Counsel 701 East IT* Street Lombard, IL 60148

Matthew Kahal Exeter Associates Suite 350, 12510 Prosperity Drive Silver Spring, MD 20904

Thomas P. Gadsden, Esq. Morgan, Lewis & Bockius 2000 One Logan Square Philadelphia. PA 19103

MarkJ. McGuire, Esq. Jenner & Block Suite 1200, 601 IS"1 Street NW Washington, DC 20005

David M. Boonin New Energy Ventures East, LLC Suite 2525, 1845 Walnut Street Philadelphia, PA 19103

Stephen J. Baron Randall J. Falkenberg J. Kennedy and Associates, Inc. 35 Glenlake Parkway, Suite 475 Atlanta, GA 30328

John P. Lavelle, Jr., Esq. Hangley, Aronchick, Segal & Pudlin 12'h Floor, One Logan Square Philadelphia, PA 19103

Charles F. Hoffman PA Public Utility Commission Office of Trial Staff P.O. Box 3265 Harrisburg, PA 17105-3265

John Wilson Community Action Association of Pa 222 Pine Street Harrisburg, PA 17101

Attorney of Record Environmental Energy Project 3700 Vartan Way Harrisburg, PA 17110

Terrance J. Fitzpatrick, Esq. Ryan, Russell. Ogden & Seltzer, LLP Suite 101, 800 N. Third Street Harrisburg, PA 17012-2025

Paul E. Russell. Esq. Donald A. Kaplan Pennsylvania Power and Light Company 2 North Ninth Street Allentown, PA 18101

Robert D. Knecht Industrial Economics, Inc. 2067 Massachusetts Avenue Cambridge, MA 02140

u:\jshelch\restnjct\compliaDCe\10-7-98servlis.doc

Samuel W. Braver, Esq. Bruce A. Americus, Esq. Buchanan Ingersoll, P.C. 20* Floor, One Oxford Centre Pittsburgh, PA 15219-1410

Roger Clark, Esq. The Environmentalists 905 Denston Drive Andler, PA 19002-3901

Mary McFall Hopper, Esq. PECO Energy Company 2301 Market Street. S23-1 Philadelphia, PA 19103

William J. Stemer, President System Local 102 Utiliry Workers Union of America AFL-CIO 333 State Street Charleroi, PA 15022

Robert Young, Esq. Allegheny Electric Cooperative, Inc. Suite 700, 212 Locust Street Harrisburg, PA 17108

Vickiren S. Aeschleman Director - Regulatory Policy QST Energy Inc. 300 Hamilton Blvd., Suite 300 Peoria, IL 61602

Elizabeth L. Rippetoe Cogentrix Energy Power Marketing, Inc. 9405 Arrowpoint Boulevard Charlotte, NC 28273-8110

Margaret A. Moore John J. Buchovecky Susan A. Moore Van Ness Feldman, P.C. 1050 Thomas Jefferson St., NW Seventh Floor Washington, DC 20007

Mary Ann Ralls, Esq. Duane, Morris & Heckscher LLP 1667 K Street, NW, Suite 700 Washington, DC 20006-1608

Robert J. Longwell, Esq. Wolf, Block, Schorr & Solis-Cohen, LLP Suite 300, 212 Locusr Street Harrisburg, PA 17101

James D. Steffes Enron Power Marketing, Inc. 1400 Smith Street, 24th Floor Houston, TX 77002

Cynthia S. Bogorad, Esq. Spiegel & McDiarmid 1350 New York Avenue NW Washington, DC 20005

Gary A. Jeffries, Esq. CNG Energy Services Corporation One Park Ridge Center P.O. Box 15746 Pittsburgh, PA 15244-0746

Douglas B. Robinson, Esq. Skadden Arps 1440 New York Avenue NW Washington, DC 20005-2111

Keith M. Sappenfield, II Director of Marketing Support NorAm Energy Management, Inc. P.O. Box 2628 Houston, TX 77252-2628

Douglas F. John, Esq. Gordon J. Smith, Esq. John & Hengerer Suite 600, 1200 17* Street NW Washington. DC 20036-3006

Robert B. Weisenmiller, PhD MRW & Associates, Inc. Suite 1440 1999 Harrison Street Oakland, CA 94612-3517

John R. Orr, Esq. Duke Energy Trading & Marketing, LLC One Westchester Center Suite 650, 10777 Westheimer Houston, TX 77042

uAjshelch\resinici\compliancc\10-7-98servlis.doc

Kenneth L. Wiseman, Esq. Robert M. Lamkin, Esq. Andrews & Kurth LLP Suite 200, 1701 Pennsylvania Ave. NW Washington, DC 20006

Leonard W. Belter, Esq. Raymond B. Wuslich, Esq. Winston & Strawn 1400 L Street, NW Washington, DC 20005-3502

Mark F. Sundback, Esq. Robert M. Lamkin, Esq. Andrews & Kurth LLP Suite 200, 1701 Pennsylvania Ave. NW Washington, DC 20006

Michael Reid, Director Materials Management Services Administrative Resources, Inc. 500 Commonwealth Drive Warrendale, PA 15086-7513

Kenneth Zielonis, Esq. Stevens & Lee 208 North Third Street Suite 310, P.O. Box 12090 Harrisburg, PA 17108-2090

Johfi L. Munsch Attorney for WEST PENN POWER COMPANY

u: \jshelch\rtstnici\compliaiice\ 1 O -gSservlis.doc

BEFORE THE PENNSYLVANIA PUBLIC UTILITY COMMISSION

Application ofWest Penn Power Company for Approval of its Restructuring Plan Under Section 2806 of the Public Utility Code, et al.

DocketNo. R-00973981

JOINT PETITION FOR FULL SETTLEMENT OF WEST PENN POWER COMPANY'S RESTRUCTURING PLAN AND

RELATED COURT PROCEEDINGS

KECEIVED nv 031958

PUBLIC UTILITY COMMISSlC '--rr* qi to*-* •

November3,1998

TABLE OF CONTENTS

I. SUMMARY OF SETTLEMENT 3

II. BACKGROUND 5

III. TERMS AND CONDITIONS 8

A. Stranded Costs 8

B. Collection and Rates 13

C. Provider of Last Resort 17

D. Environmental Issues 22

E. Universal Service and Energy Conservation 26

F. Industrial Tariffs 28

G. Billing and Metering 29

H. Phase-In 34

I. EGS Function 34

.1. Code of Conduct 36

K. Transfer of Generating Assets 36

L. Miscellaneous 39

M. Resolution of Other Issues 41

N. Withdrawal of Pending State And Federal Court Cases 41

0. Effectiveness, Duration And Enforcement Of Settlement 43

P. Complete Agreement; No Alterations Or Modifications 44

IV. PUBLIC INTEREST CONSIDERATIONS 46

V. CONCLUSION 49

APPENDICES TO JOINT PETITION FOR SETTLEMENT

A. Summary ofWest Penn Power Company's System Average unbundled Rates and CTC Revenues

B. West Penn Power Company's General Tariffs Supplement No. 119 to TariffNo. 37 Supplement No. 140 to TariffNo. 39

C. Rules for Competitive Billing and Metering

D. Rate Credits for Competitive Metering and Billing

E. Application of West Penn Power Company for a Qualified Rate Order

F. West Penn Power Company Electric Generation Coordination Tariff

G. West Penn Power Competitive Safeguards

H. West Penn Power Company Interim Code of Conduct

I . West Penn Power Company Competitive Organization

J. West Penn Power Company Generation Assets and Liability Accounts for Transfer

K. West Penn Power Company Proof of Revenues (1999-2008)

j BEFORE THE PENNSYLVANIA PUBLIC UTILITY COMMISSION

Docket No. R-00973981 Application of West Penn Power Company for

6 Approval of Restructuring Plan Under 7 Section 2806 of the Public Utility Code 8

9

10

11 JOINT PETITION FOR FULL SETTLEMENT OF 12 WEST PENN POWER COMPANY'S n RESTRUCTURING PLAN AND 14 RELATED COURT PROCEEDINGS 15

16

17 West Penn Power Company ("West Penn" or "Allegheny" or the

18 "Company"); the Office of Consumer Advocate ("OCA"); the Office of Small Business

19 Advocate ("OSBA"); the Office of Trial Staff ("OTS"); the West Penn Power

20 Industrial Intervenors ("WPPII"); Allegheny Electric Cooperative ("AEC);

21 Pennsylvania Retailers' Association ("PRA*'); Enron Power Marketing, Inc.

22 ("Enron"); Mid-Atlantic Power Supply Association ("MAPSA"); New Energy

23 Ventures East L.L.C. ("NEV"); Community Action Association of Pennsylvania

24 ("CAAP"); the Environmentalists; Hospital Shared Services, Inc./Administrative

25 Resources, Inc. ("HSS/ARI"); and The Pennsylvania State University ("Penn State");

20 PECO Energy Company ("PECO") and other parties designated on the signature pages

27 (all such parties collectively referred to as the "Joint Petitioners"), by their counsel,

2K respectfully submit this Joint Petition for Full Settlement of West Penn's Proposed

21J Restructuring Plan and Related Appeals ("Joint Petition").

Mi

1 The terms and conditions of the Joint Petition represent a comprehensive

2 settlement which resolves all issues before the Commonwealth Court and all issues

3 before the U.S. District Court arising from challenges by the Joint Petitioners to the

4 Commission's final order, reconsideration order, compliance order and any related

5 appeals regarding West Penn's Application for Approval of its Restructuring Plan

6 Under Section 2806 of the Public Utility Code. The Joint Petitioners aver that this

7 comprehensive settlement is in the public interest and, therefore, request that the

fi Commission: (1) approve without modification the proposed settlement as set forth in

y the Joint Petition; (2) amend the Commission's final order, reconsideration order and

io compliance orders as necessary to implement the full settlement; (3) approve the tariff

i 1 supplements necessary to implement the proposed settlement as appended hereto; (4)

12 issue a Qualified Rate Order authorizing West Penn to securitize up to $670 million of

13 stranded assets and costs as agreed to herein; (5) approve West Penn's transfer of

u generation assets as set forth herein, including potential adjustment of recovery of

15 stranded costs determined, at West Penn's option, by divestiture of generation assets;

ir> and (6) approve West Penn's establishment of a regulatory asset for CTC revenues as

17 described more fully herein.

is

20

In support of their request, the Joint Petitioners state as follows:

1 I . SUMMARY OF SETTLEMENT

2 The Joint Petitioners have agreed to the proposed settlement terms and

3 conditions set forth in this document as a means to resolve, finally and equitably, all

4 issues arising from West Penn's proposed restructuring plan, in lieu of further

5 protracted and expensive litigation in state and federal courts.

6

7 In particular, the Joint Petitioners have agreed to terms and conditions

s that fairly balance the interests of all parties affected by West Penn's restructuring plan

y and that foster the creation of a competitive market. All West Penn retail customer

io classes wil! receive a guaranteed 2,5% rate reduction effective January 1, 1999, the

n start date of retail electric generation competition, through December 31, 1999. In

12 addition to the guaranteed rate reduction, customers shall receive system-average

13 shopping credits of 3.16 cents per KWH on January 1, 1999, with a steady escalation

14 of the shopping credit throughout the entire recovery period of the Competitive

15 Transition Charges ("CTCs"). Customers that elect to shop for generation could receive

if' rate reductions in 1999 equal to the 2.5% rate decrease plus savings produced by the

n difference between their generation purchase price and their shopping credit. In

is addition. West Penn agrees to cap its rates to customers at the levels currently in effect

iy until at least January 1, 2006 and its generation rates at the levels set forth in

20 Appendix A until at least January 1, 2009, subject to the terms contained herein.

21

1 In the event that Allegheny Energy, Inc.'s ("Allegheny Energy")

2 proposed merger with DQE, Inc. ("DQE") is consummated, system average shopping

3 credits will escaJate from 3.16 cents per KWH in 1999 to 4.09 cents per KWH in 2008,

4 and distribution rates will be reduced starting in 2001.

6 In addition, subject to the terms contained herein. West Penn shall (1)

7 recover a substantially smaller amount of stranded cost recovery than it claimed before

n the Commission; (2) be subject to competitive safeguards to ensure fair dealing; (3)

9 expand its current universal service programs; (4) accelerate the phase-in for customer

10 choice for all customer classes; (5) educate consumers about restructuring; (6) facilitate

] I funding of sustainable energy; (7) encourage small renewable energy technologies; (8)

12 withdraw all of its proceedings before the Commonwealth Court and its civil complaint

13 before the U.S. District Court challenging the Commission's Restructuring Order,

u Reconsideration Order, and Compliance Orders at Docket No. R-00973981; (9)

15 accelerate the recognition of CTC revenue through the creation of a regulatory asset;

16 (10) be required to securitize up to 100% of stranded costs with 75% of the savings

17 realized from such securitization shared with consumers; (11) be permitted to transfer

is generation assets to an affiliate; and (12) be required to adjust the CTC recovery in the

19 event West Penn sells its generation assets within the next three years.

20

21 The other Joint Petitioners, in turn, agree to resolve all objections to

22 West Penn's Restructuring Plan, as set forth herein, and to withdraw (1) all cases

1 pending before the Commonwealth Court which challenge the constitutionality of the

2 Electric Competition Act except as specifically provided in Paragraph N.5. and (2) all

3 proceedings pending before the Commonwealth Court which challenge the

4 Commission's Restructuring Order, Reconsideration Order and Compliance Orders at

? Docket No. R-00973981, as set forth in Part N herein.

6

7 II. BACKGROUND

s 1. On December 3, 1996, Governor Ridge signed into law the

y Electricity Generation Customer Choice and Competition Act (66 Pa. C.S. §§ 2801 et

io seg.)(the "Electric Competition Act"). The Electric Competition Act fundamentally

M restructures the provision of retail electric service in Pennsylvania by mandating the

12 introduction of customer choice of generation supplier commencing January 1, 1999.

13

14 2. On August 1. 1997, West Penn submitted a comprehensive

15 Restructuring Plan in which it requested the Commission to approve (1) the imposition

Ki of unbundled rates, CTCs and specific tariff provisions to ensure customers direct

n access to all electric generation suppliers licensed under Chapter 28 of the Public

is Utility Code to offer services authorized under the licenses within the Commonwealth

19 of Pennsylvania ("EGSs"); (2) the recovery of $1.2 billion of stranded costs net of

20 mitigation; (3) the implementation of a plan to meet its universal service obligations,

21 including a mechanism to recover the costs of those obligations; (4) the implementation

1 of a proposed Consumer Education Program; and (5) implementation of procedures to

2 establish West Penn as a provider of last resort.

3

4 3. West Penn provided notice of its Restructuring Plan filing to all

5 customers by bill insert. In addition, notice of the filing was published in newspapers

6 of general circulation in West Penn's service territory. West Penn also provided a

7 summary of the filing to all individuals on the Commission's Executive Director's

s Stakeholders list.

y

io 4. West Penn's filing was assigned to Administrative Law Judge

H Larry Gesoff (the "ALJ"). Thereafter, the parties above intervened in the proceeding.

12 Extensive testimony addressing almost every aspect ofWest Penn's Restructuring Plan

13 was filed by West Penn and the other active parties. In addition, three public input

u hearings were held at which a total of thirteen individuals testified. Evidentiary

15 hearings were held on December 15-19, 1997, and January 5-7, 1998. The record in

lc- this proceeding was closed on January 30, 1998. On February 12, 1998, ALJ Gesoff

i~ denied West Penn's Motion to Compel and Reopen.

is

I'J 5. On March 23. 1998, ALJ Gesoff issued his Recommended

2ii Decision. Among other things, the AU recommended that West Penn recover,

21 through the CTC, approximately $241 million in stranded costs.

1 6. At its public meeting on May 21, 1998, the Commission adopted

2 an Opinion and Order which modified the ALJ's Recommended Decision and West

3 Penn's proposed Restructuring Plan. The Opinion and Order, which issued on May 29,

4 1998, determined, inter alia, that West Penn's proven net stranded costs were $593

5 million (or $524.2 million in the event that the proposed merger between Allegheny

6 Energy and DQE is consummated) and that unbundling of West Penn's rates resulted in

7 a customer shopping credit of 3.12 cents per KWH in the first year (assuming that the

8 merger took place).

9

in 7. On June 12, 1998, West Penn and HSS/ARI, filed petitions

11 requesting that the Commission rehear, reconsider, clarify and amend certain aspects of

12 its Restructuring Order. By Opinion and Order entered July 21, 1998, the Commission

n denied the petitions with a few limited exceptions; the Commission granted West

u Penn's request to correct a typographical error which incorrectly identified the date of

15 full phase-in, and to correct an error in the Deferred Emission Allowances calculation.

K. This change increased the amount of stranded costs recoverable by West Penn by

17 $522,000. In order to preserve the shopping credit of 3.12 cents per KWH in 1999,

18 the Commission extended the recovery period for West Penn's CTC through June 30,

19 2006.

20

21 8. In response to the Restructuring Order entered May 29, 1998,

22 the Reconsideration Order entered July 21, 1998, and the Commission's orders on

1 West Penn's compliance filings, West Penn has filed appeals to the Commonwealth

2 Court and a civil complaint action in the U.S. District Court. In addition, an appeal to

3 the Commonwealth Court challenging various aspects of the Commission's orders has

4 been filed by HSS/ARI. Cross appeals have been filed by OCA and WPPII. WPPII

5 also filed an appeal from one of the Commission's Compliance Orders. An original

6 jurisdiction action for Declaratory Judgment was filed with the Commonwealth Court

7 by West Penn on September 2. 1998.

K

y 9. On and after August 14, 1998, the Joint Petitioners signed a

10 "Pre-Settlement Agreement" designed to set forth the procedural ground rules for

11 participation in settlement negotiations aimed at resolving the matter in lieu of further

12 litigation in state and federal courts. Talks initially terminated without a resolution, but

13 were restarted on October 16, 1998. This Joint Petition is the product of these

14 negotiations.

15

16 HI. TERMS AND CONDITIONS

n 1. The Joint Petitioners, intending to be legally bound and for

is consideration given, agree as follows:

19

20 A. Stranded Costs

21 A . l . West Penn shall be permitted to recover from its retail

22 electric customers $670 million of stranded assets and costs ($630 million in the event a

1 merger with DQE occurs) through either a CTC (to remain in effect from January 1,

2 1999 to December 31, 2008) and/or an Intangible Transition Charge ("ITC") to be put

3 in place any time after the effective date of this Settlement and the issuance of

4 transition bonds and to remain in effect up to December 31, 2008.

r, A.2. West Penn requests the Commission to declare that good

7 cause has been shown under Section 2808 of the Electric Competition Act to permit

R West Penn to recover the stranded assets and costs set forth below through a CTC or

9 ITC extending to December 31, 2008. West Penn also requests that the Commission

to expressly find that the transition and stranded cost recovery and level of CTC/ITC

11 charges to customers and the recording of a regulatory asset associated with such

12 recovery as provided herein are just and reasonable and that securitization of up to

13 $670 million of stranded costs is just and reasonable and in the public interest.

14

15 A.3. The other Joint Petitioners do not object to these findings,

if* The total authorized recovery of $670 million (or $630 million in the event of a merger

with DQE) includes all amounts previously approved for recovery by the Commission

ix in its May 29, 1998 Restructuring Order and its July 21, 1998 Reconsideration Order at

19 Docket No. R-00973981, and all amounts of stranded cost recovery above the amount

20 previously ordered by the Commission shall be deemed to apply to West Penn's owned

21 generation assets.

1 A.4. Under the terms of this Settlement, West Penn shall be

2 permitted to recover $670 million (or $630 million in the event of a merger with DQE)

5 for transition and stranded costs through a CTC and/or an ITC as set forth in

4 Appendices A, B and K and Paragraphs A . I , A.5, B.l. and B.2. Subject to the

5 provisions of Section A.6, this total authorized recovery of $670 million (or $630

r> million in the event of a merger with DQE) constitutes full and final satisfaction of all

7 transition and stranded costs that West Penn has claimed or could have claimed before

K the Commission pursuant to Section 2808 of the Electric Competition Act. The

l) Appendices also set forth the shopping credits and CTC recovery of $630 million

in dollars, in the event the merger with DQE is consummated.

n

12 A.5. West Penn will seek to securitize an amount not exceeding

\? $670 million (or $630 million in the event of a merger with DQE) in stranded costs,

u subject to the requirements of the Electric Competition Act and the terms and

15 conditions set forth below. The Joint Petitioners agree that 75% of the annual net

16 savings of West Penn's securitization of stranded costs will be applied to reduce the

17 CTC/ITC as those savings are realized as set forth in a securitization compliance filing

is and the remaining 25% of the annual net savings of securitization will be retained by

iy West Penn. The savings from securitization are provided for in these CTC/ITC

20 reductions and constitute full compliance with Sections 2808(e) and 2812(b)(2) of the

21 Electric Competition Act and no further rate adjustment is required. 66 Pa. C.S.

22 §§2808(6) and 2812(b)(2). West Penn is required to seek securitization of its stranded

10

1 assets and costs under reasonable terms and conditions, absent a legal impediment as

2 reasonably determined by West Penn's Vice President- Legal. The effectiveness of this

3 Settlement is contingent upon the issuance by the Commission simultaneous with

4 approval of this Settlement of an irrevocable Qualified Rate Order as set forth in

5 Appendix E under Section 2812 of the Electric Competition Act (66 Pa. C.S. §2812)

d authorizing the issuance of up to $670 million (or $630 million in the event of a merger

7 with DQE) of Transition Bonds at any time after the issuance of such Qualified Rate

n Order, provided that the ITC charges to customers terminate no later than

y December 31, 2008. West Penn hereby applies for the issuance of a Qualified Rate

it) Order as set forth in Appendix E which is incorporated as a part of this Settlement. The

11 Joint Petitioners agree not to oppose West Penn's application for a Qualified Rate

12 Order and West Penn's securitization of its stranded assets and costs in accordance with

13 this agreement. The Joint Petitioners agree that, to the extent necessary, the testimony,

u exhibits, applications and other documents submitted by the parties and the record from

15 the hearings in this proceeding form the basis for this Settlement and West Penn's

i(i Application for a Qualified Rate Order.

17

A.6 Notwithstanding anything else contained herein to the

19 contrary, in the event West Penn (or its affiliate, if a transfer has been undertaken

2(i pursuant to Section K) enters into a definitive agreement to sell all or a portion of its

21 generating assets under the circumstances set forth below on or before January 1, 2002,

22 West Penn shall, upon application to and approval by the Commission, adjust its

1 stranded cost recovery amount to reflect actual stranded costs as determined by a

2 divestiture of generation assets. Such adjustment shall only apply to generation sales

3 pursuant to a voluntary divestiture of all West Penn owned generation, or to an

4 involuntary divestiture of individual stations required by a final order of this

5 Commission, the Federal Energy Regulatory Commission or the Department of Justice

fi as a condition of approval for the proposed merger of Allegheny Energy and DQE.

7 Such adjustment shall take into account any expenses associated with a divestiture,

K including any impact on securitization bonds. In the event of a partial divestiture,

y ordered as set forth above, the Company's stranded costs will be adjusted by the

lit difference between the after tax proceeds from such sale and the market value of the

11 sold assets as set forth in Appendix L. If West Penn seeks a voluntary divestiture of a

12 portion of its generating assets, West Penn shall seek approval of such transfer from the

n Commission and all parties reserve the right to present all positions in that proceeding

14 regarding appropriate adjustment to the stranded cost amount.

15

16 A.7. In the event West Penn (or its affiliate, if a transfer has

n been undertaken pursuant to Section K) enters into a definitive agreement to sell all of

IK its generating assets after January 1, 2002, 100% of the net Pennsylvania jurisdictional

iy proceeds shall be utilized to offset all of the Company's stranded costs (including all

20 CTC collections) up to the total amount of the stranded cost approved for recovery in

21 this Settlement. Such adjustment shall take into account any reasonable, verifiable and

22 necessary expenses associated with a divestiture, including any impact on securitization

12

1 bonds. If such transaction results in an increased stranded cost amount, no increased

2 stranded costs shall be recovered from ratepayers.

3

A A.8. West Penn agrees that it will not contend this Settlement

5 provides for inadequate recovery of NUG-related stranded costs as the basis for

6 unilaterally reducing the contract rates paid to FERC-qualifying facilities selling power

7 to West Penn under PUC-approved contracts. This settlement is not intended to limit

x and does not limit, in any way any other argument or claim West Penn may make

y regarding the rates paid to FERC-quaiifying facilities selling power to West Penn under

10 PUC-approved contracts. This settlement is also not intended to preclude and does not

11 preclude mutually agreed upon buy down or buy out agreements or any other voluntary

12 contract renegotiations.

13

u B. Collection and Rates

(5 B.l. West Penn shall reduce its retail electric rates by 2.5%

lc effective January 1, 1999. and that 2.5% rate decrease will continue in effect through

I " December 31, 1999. The January 1, 1999 rate decrease reflects the Company's

is obligation, as of the effective date of this Settlement, to make a refund to customers

K; from 1998 revenues of $ 25.1 million (which excludes gross receipts tax). The rate

20 decrease will apply to each rate classification and all customers within those rate

21 classifications as set forth in Appendices B and K. •>•> 13

1 B.l.a. On January 1, 1999, West Penn will unbundle its retail

2 electric rates into the following components: (1) distribution charges, (2) transmission

3 charges, (3) a CTC and, if applicable, an ITC and (4) a generation shopping credit.

4 Transmission and distribution charges, and the amount for the ancillary services

5 included therein shall be priced and stated separately. The system-wide average values

fi for these components for the years and the appropriate income recognition for CTC

7 amounts, both with and without the merger, are indicated as set forth in the following

8 Appendix A. The proposed tariffs set forth in Appendix B are the tariffs that implement

9 this Settlement,

io

11 B.l.b. The parties have contested the appropriate method of

12 setting CTC rates. The parties agree to resolve this conflict by acknowledging that the

13 annual stranded cost values that West Penn is authorized to receive are as specified in

14 Appendix A. The resulting annual CTC Revenue Requirements, subject to annual

I? reconciliation and adjustment as required by Section 2808(f) of the Act, to be collected

ifi from West Penn's customers are shown in Appendix A which also shows how CTC

17 revenues will be divided between regulatory asset amortization and return. West Penn

18 is authorized to create a regulatory asset for the stranded cost recovery values for 1999

19 through 2002, and the recovery of that regulatory asset shall be amortized over the

20 years 2003 through 2008 as shown in Appendix A.

21

14

1 B.2. The Joint Petitioners agree that the rate cap exceptions set

2 forth in Section 2804(4) of the Electric Competition Act shall apply to the rates set

3 forth in this Settlement, except as otherwise specifically set forth herein. If at any time

4 during the CTC Recovery Period, West Penn requests and is granted a rate increase

5 pursuant to Section 2804(4) of the Electric Competition Act (Rate Cap Exceptions)

6 such increase shall not reduce the shopping credits listed in Appendices A and B and

? such increase shall be allocated to the appropriate unbundled rate category in

8 accordance with determinations of the Commission.

IJ

In B.3. The cap on West Penn's transmission and distribution

11 charges, which otherwise would expire on June 30, 2001 under Section 2804(4) of the

12 Electric Competition Act (66 Pa. C.S. §2804(4)), will be extended until December 31,

13 2005 for all retail customers. As set forth in Appendices A and B, the generation rate

14 cap is extended from the end of 2005 to the end of 2008, three years beyond the

15 statutory rate cap period provided in the Electric Competition Act, and is increased to

io 4.11 cents/KWH in 2006 and 2007. and increased to 4.39 cents/KWH in 2008. To the

r extent that West Penn transfers any generating capacity to an affiliate pursuant to

IK Paragraph K.l of this Settlement, any power subsequently purchased by West Penn

iy from that affiliate shall be deemed to be within the control of West Penn for purposes

20 of determining the applicability of the rate cap exception in Section 2804 (4)(iii)(D) of

21 the Electric Competition Act. In any proceeding under that subsection, the

15

1 Commission shall consider the impact of any sales by that affiliate to third parties in

2 determining whether the rate cap exception should be granted.

4 B.4. The Joint Petitioners shall not file a complaint with the

5 Commission or otherwise challenge West Penn's current retail transmission or

distribution rate structure, or the level of retail transmission charges or the level of

West Penn's retail distribution rates as set forth in Appendices A and B hereto until the

expiration of the transmission and distribution cap as set forth above. Any Joint

y Petitioner, however, may participate as a complainant or otherwise in any future

10 transmission rate proceeding in which an increase in West Penn's transmission rates or

11 change in rate structure is proposed and, further, may file a complaint or otherwise

12 participate in any proceeding before the Commission to adjust West Penn's distribution

13 rates as a result of any increase in West Penn's transmission rates or change in rate

i-f structure in effect as of November 1, 1998.

15

16 B.S. The transmission and distribution rate cap of 1.73 cents

17 per KWH includes 1.72 cents per KWH for all existing costs and services and .01 cents

18 per KWH for the sustainable energy fund during the transmission and distribution rate

19 cap period. No new fees shall be proposed or charged during the transmission and

20 distribution rate cap period for a cost or service that is included in the bundled

21 transmission and distribution rate. In the event of merger with DQE, the transmission

22 and distribution rates set forth in Appendix A will apply.

16

2 B.6. Pursuant to this Settlement, West Penn agrees to cap the

sum of its transmission and distribution charges, as described above. If, during the

4 period that this rate cap is in effect, West Penn's transmission charges or rates

5 (including but not limited to ancillary charges) are increased, then West Penn's

c distribution rates will be reduced in a non-discriminatory manner sufficient to avoid

7 exceeding the transmission and distribution rate cap. Within sixty days after issuance

K of a Federal Energy Regulatory Commission ("FERC") Order modifying West Penn's

9 transmission revenue requirement or rate structure to the extent that such change or

10 modification affects West Penn's transmission charges. West Penn shall submit a tariff

11 supplement with supporting data to the Pennsylvania Public Utility Commission which

12 makes any necessary changes to West Penn's distribution rates to ensure that the sum of

n the distribution rates and the transmission rates and charges to each class of customers

14 does not exceed the transmission and distribution rate cap.

ifi C. Provider of Last Resort

17 C l . West Penn agrees that, for the duration of the CTC/ITC

IH recovery period, it will serve as the provider of last resort for all retail electric

19 customers in its service territory that do not choose or cannot choose to purchase power

20 from alternative suppliers, subject to the following terms, conditions and qualifications:

21

17

1 C.l.a. On January 1, 2001, 20% of all ofWest Penn's residential

2 customers — determined by random selection, including low-income and inability-to-

3 pay customers, and without regard to whether such customers are obtaining generation

A service from an EGS ~ shall be assigned to a provider of last resort-default supplier

5 other than West Penn that will be selected on the basis of a Commission-approved

(> energy and capacity market price bidding process, except as provided in C.l.h. This

7 service shall be referred to as Competitive Default Service ("CDS").

x

y C.l.b. For purposes of this bidding process, all of the customers

HI selected shall constitute a single bidding block. To qualify for the CDS bidding process

11 an EGS must, among other Commission-approved requirements, agree to provide in

12 2002 at least 2.0% of its offered energy supply for CDS service from solar, wind,

13 sustainable biomass (including landfill gas but excluding incineration of Municipal

u Solid Waste), geothermal or ocean power. This increment shall increase by annual

(5 increments of 0.5% thereafter. The requirement to include these levels of sources in

if- the resource mix may be lowered by the Commission if the cost of the power from

17 these sources increases the cost of the entire block by more than 2% over what the cost

in would be without these sources.

iy

20 C.I.c. Terms and conditions of CDS shall be established,

21 maintained, and modified by the Commission. Competitive Default Service bids will

22 require a term that will be established by the Commission. Bids will provide a fixed

18

1 rate for the term, unless an alternative rate structure is approved by the Commission.

2 Any bid that exceeds the generation shopping credit will be rejected. West Penn's

3 EDC or West Penn's divisional or affiliated EGSs may not bid (either directly or as a

4 partner or participant in any business combination with a bidder) on CDS service. Any

5 non-affiliated EGS or consortium of EGSs that are licensed by the Commission and

d that meet applicable terms and conditions and standards for CDS service may bid to

7 provide CDS service. Chapter 56 billing and collection costs, uncollectible expense,

« and universal service costs shall be unbundled by West Penn. Revenues equal to the

l-> amount of these unbundled costs shall be portable with customers randomly assigned

if) to the CDS and shall be provided to the CDS provider to the extent it is providing

11 services funded by these unbundled costs.

12

13 C.l.d. A customer assigned to CDS retains the right to elect a

u competitive EGS or return to West Penn default provider of last resort service at any

15 time with no switching charge. If a consumer returns to CDS for any reason, the

16 consumer will receive service from its CDS on the same terms and conditions and at

17 the same rate available to other CDS customers. The CDS provider will, at the

is customer's option, provide a single bill, subject to the same standards for EGS

19 consolidated billing as provided in Appendix C and as established by the Commission.

20 The CDS will include all customer care functions, including processing customer

21 accounts in accordance with all applicable regulations, including but not limited to

22 Chapter 56. The CDS will be rebid annually, unless an alternative bidding term is

19

1 approved by the Commission. If, 30 days prior to the annual bid the number of

2 residential customers served by the CDS has fallen below 17%, a further random

selection of customers shall be assigned to CDS service to restore the number of

4 customers for the 20% level. The further random selection shall be chosen in a manner

5 to be determined by the Commission. The Commission will develop qualifications for

6 an EGS to bid on CDS, including credit worthiness and increased bond amount.

-i

« C.l.e. The EGS selected as the CDS provider will assume all

9 responsibilities and obligations associated with provider of last resort service that are

(o specified by the Commission. By January 1, 2001, the Commission will issue final

JJ standards governing the PLR responsibilities and obligations ofWest Penn and the CDS

12 in West Penn's service territory. Provided, however, that nothing in the Commission's

i i final standards shall permit a CDS to install, initially test or maintain a residential

n meter prior to January 1, 2003.

15

16 C. I .f. West Penn's distribution company shall satisfy its

17 obligation as provider of last resort by maintaining or purchasing, at wholesale,

ix required amounts of energy and capacity from other generation suppliers including, in

19 its sole discretion, any generation affiliates, and reselling that energy and capacity.

2ti Until January 1, 2001, West Penn will charge customers its tariff rates as set forth in

21 Appendices A and B.

•)•) 20

1 C. 1 .g. On and after January 1, 2001 West Penn as provider of last

2 resort-default supplier will price its generation service to residential customers at its

sole discretion with the following limitations. West Penn will establish a rate for each

4 residential rate schedule. The rate will be:

5

6 C. 1 .g.(i) no less than the price charged by the CDS selected to be

7 the alternative provider of last resort-default supplier in the 20% bid; and

s

y C. l.g.(ii) no higher than the shopping credit,

io

n C. 1 .h. In no event will the price exceed the shopping credit or be

12 lower than the winning CDS bid. In the event that no qualifying bids are received at

[? or below the shopping credit, West Penn shall provide PLR service at the rate cap

u levels. Notwithstanding the above. West Penn retains the right to file a petition with

15 the Commission seeking authorization for a rate cap exception pursuant to Section

16 2804 (4) (iii). Residential customers that remain with or return to West Penn

17 provider of last resort-default service will pay the rate as set by West Penn during

is January of each year.

j y

20 C.l.i. West Penn, as provider of last resort-default supplier, will

21 price its service to industrial and commercial customers at tariffed rates or at special

22 contract rates as set forth in Appendix B.

21

2 C.l.j. The Joint Petitioners agree that through December 31,

3 2008, customers may choose to purchase power from alternative suppliers and later

-i return to take generation service from West Penn's EDC, or to their assigned provider

5 of last resort-default supplier at the rates, riders and schedules in the approved tariffs.

6

7 C.2. This Settlement does not address, and the Joint Petitioners

s make no commitment regarding, West Penn's obligation to serve after December 31,

9 2008, or the continuance or discontinuance of the right to choose an alternative supplier

10 and later return after December 31, 2008. The obligation to serve beyond December

11 31, 2008 shall be subject to the Commission regulations promulgated pursuant to

12 Section 2807 (e), or any Commission order regarding the obligation to serve.

13

u D. Environmental Issues

15 D.l . Renewable Energy Development. West Penn has included

ir> in its Tariff a Net Energy Metering Rider (as shown in Appendix B) which allows

17 residential and small commercial customers to install and operate renewable energy

J8 generation, including appropriate provisions for self-generation and net metering.

19 Renewable generation sources which qualify for service may include photovoltaic

20 systems, biomass, coal mine-based methane gas, fuel cell, hydro, methane field, and

21 wind. Also included, are hybrid renewable generation systems and other renewable

22 technologies specifically approved by the Company.

22

2 D.2. The design and installation of the customer's generation

3 must comply with all applicable laws and regulations and shall meet all applicable

4 safety and performance standards established by the National Electric Code, the

5 Institute of Electrical and Electronics Engineers, Underwriters Laboratory and the

6 Company. The Company has established standards to insure safety and reliability of

7 interconnected operations. These standards are set forth in APS Engineering Manual

8 Section 35, Subject Indices 1.0, 2.0 and 3.0 and are titled "Nonutility Generation",

9 ("Standards"). These standards are on file with the Pennsylvania Public Utility

in Commission and must be satisfied before the Company will interconnect with the

11 Customer. The interconnection requirements for the inverter portion of photovoltaic

12 systems as described in IEEE P929 Recommended Practice for Utility Interface of

13 Photovoltaic (PV) Systems including its references to Inverter test procedure UL 1741

14 references will be incorporated into the Company established standards as soon as the

1? recommended practice becomes a standard. As further evidence of West Penn's

ifi commitment to this principal, the inspection fee included in Net Energy Metering Rider

17 for a qualifying photovoltaic generating system has been set at $35.00 and the cost for

IK the engineering review and inspection of other types of renewable generation systems

19 based on actual cost up to a maximum of $250.00.

21)

21 D.3. Sustainable Energy Fund. West Penn will establish a

22 sustainable energy fund which shall be funded by a payment of $11,425,721 on

23

1 December 31, 1998. Beginning January 1, 2006, the fund shall be funded from the

2 1.73 cents per KWH transmission and distribution rate at .01 cents per KWH (less

3 applicable gross receipts tax) on all power sold after that date, unless the Commission

4 establishes new distribution rates. The .01 cent per KWH shall not automatically be

5 considered a cost of service element upon expiration of the transmission and

6 distribution rate cap. The Sustainable Energy Fund shall be managed by an

7 administrator designated by a seven-member Board of Directors to be nominated by the

8 Joint Petitioners and approved by the Commission. The fund shall operate according to

9 the procedures set forth in its by-laws, which are to be reviewed and approved by the

10 Commission. The fund is to have an annual audit and is to make semi-annual reports to

11 the Commission and to the parties. The purpose of the fund is to promote the

12 development and use of renewable energy and clean energy technologies, energy

13 conservation and efficiency which promote clean energy.

14

15 D.4. Renewable Energy Pilot Program. West Penn agrees to

16 implement a low-income renewable energy pilot program for 1999 and 2000 which will

n consist of a solar hot water heater program and a photovoltaic program. The number of

18 installations of solar hot-water heaters and photovoltaics shall be determined in a

N cooperative effort between West Penn, the Commission's Bureau of Consumer

2t) Services, the Office of Consumer Advocate, the Community Action Association of

21 Pennsylvania, and the Pennsylvania Weatherization Providers Task Force and other

22 interested parties during the design and development of the renewable energy pilot

24

I program. The renewable energy pilot program will be operated by Pennsylvania

: Weatherization Providers Task Force members agencies. The budget for the solar hot

3 water heater program will be $110,000 for each year. The 1999 budget for photovoltaic

4 installations will be $125,000 and the 2000 budget will be $265,000. The photovoltaic

5 program may include small-scale wind and pv/wind hybrid systems. There will be a

6 5% administration factor for the entire budget. Funding of the renewable energy pilot

7 program will be provided in the Universal Service and Energy Conservation budget

s other than the mandated LIURP and LIPURP funding levels set forth in the

y Commission Order of May 29, 1998. To the extent that the Company's renewable

lu pilot program expenses in a given year do not reach the budgeted levels noted above,

11 such unexpended funds will be rolled over to be spent in later years.

12

\3 D.5. ECAP Programs. In order to foster competition in the retail

u residential electric market in the western Pennsylvania region, and strengthen

15 Pennsylvania's conservation and renewable energy initiatives, West Penn agrees to

if> contribute four million dollars ($4 million) of shareholder funds to the Energy

r Cooperative Association of Pennsylvania (ECAP), a licensed aggregator, for a four-

is vear program aimed at: (i) providing residential customers, particularly low-income

iy and rural households, with lower priced electricity than they could secure on their own;

2n (ii) enabling low-income customers to also realize long term savings through

2! participation in ECAP's conservation services program consistent with West Penn's

22 obligation under Section 2804 (15) of the Act; (iii) providing an opportunity for clean

25

i and renewable energy sources to be expanded, and to become a greater pan of the

: energy mix in Pennsylvania; and (iv) providing a practical opportunity to create a fuel

mix source and emissions disclosure test/pilot program.

4

5 D.5.a. All ECAP low-income and rural programs and services will

6 be provided through the same Community-Based Organization networks in the manner

7 prescribed in paragraphs D.4. and E.2. of this document except where these local

fi providers are not in a position to or unwilling to provide the programs and services.

y

m D.5b. All ECAP low-income and rural program designs will be

11 submitted for review to the Commission's West Penn Consumer Advisory Committee as

12 provided for in paragraph E.5 of this document. A report on this project shall be

13 submitted annually by ECAP to the West Penn Consumer Advisory Committee.

14

15 E. Universal Service and Energy Conservation

if> E. 1. West Penn shall implement a Universal Service and

r Energy Conservation Program, including LIPURP and LIURP programs, in the manner

is and at the funding levels approved in the Commission's order of May 29, 1998, at

]y pages 247-255. For purposes of this Settlement, the maximum level of funding as

20 approved in the Order -- $5.88 million per year for LIPURP, and $2,202 million per

21 year for LIURP, as well as the renewable energy pilot program - shall be deemed to

22 be reflected in the residential distribution rates set forth in the West Penn Tariff at

2? Appendices B and K.

26

• 2 E.2. West Penn shall use Community-Action Agencies to

3 operate its LIPURP and Pennsylvania Weatherization Providers Task Force member

4 agencies to operate its LIURP.

6 E.3. To the extent that the Company's expenses in a given year

7 do not reach the funding levels noted above, the excess monies collected for the

8 universal service fund shall be rolled over to be spent in later years for universal

lJ service programs.

iff

11 E.4. The allocation of any universal service and energy

12 conservation program costs among customer classes after the end of the distribution and

13 transmission rate cap shall be determined by the Commission at that time.

14

15 E.5. A consumer advisory committee made up of consumer,

id environmental, rural, public and utility representatives from or .serving the West Penn

P service territory, including representatives of the Community-Action Association of

is Pennsylvania and the Pennsylvania Weatherization Task Force, and a staff member of

iy the Commission's Bureau of Consumer Services, will be established to participate in

20 the - development of the Company's universal service and energy conservation

21 programs. The committee will periodically review the Company's universal service

27

1 and energy conservation programs and the Company will consider all committee

2 recommendations.

4 F. Industrial Tariffs

5 F.l. For Schedule 40 and 46, the Company will prorate

provisions of those rate schedules based upon the transmission, distribution and

generation services purchased by the customer from the Company to the extent such

8 purchases impact the rate schedule calculations for minimum billing demands,

9 minimum bills, billing demand ratchets, and base bill demand and consumption.

11 F.2. For individual customers served on Schedules 40 and 46,

12 1998 demand and energy levels will be utilized as base year consumption for purposes

i.> of calculating the individual customer's CTC. A customer's growth in demand and

14 energy usage above the customer's 1998 base year levels will be exempted from

15 competitive transition charges. In no circumstance will the total CTC revenue allocated

ifi each year and collected from either Rate Schedule 40 or 46 be reduced due to this

I? provision.

18

19 F.3. The Company will unbundle special and individualized

contracts into transmission, distribution, competitive transition charge and shopping 2ti

21 credit components such that any discount or credit applied to each component will be

28

1 portable and shall apply on a comparable basis whether or not a customer chooses to

2 obtain generation supply from a competitive supplier.

3

A FA. The availability section of the Opportunity Power Rider

5 shall be amended in order to permit eight levels of Opportunity Power to be scheduled

6 in any billing month as opposed to the current limitation of four levels.

7

s G. Billing and Metering

9 G.l. Commercial and Industrial Metering. Subject to review as

10 described in Paragraph G.7., in consultation with the Joint Petitioners regarding

u operational constraints, effective September 1, 1999, a Commission-licensed EGS may

12 provide, finance, install, own, maintain, calibrate and remotely read advanced meters

13 for service to commercial and industrial customers located in West Penn's service

14 territory subject to the ability of the EGS to comply with Appendix C.1

15

16 G.l.a. Starting August 1, 1999, West Penn shall maintain cost-

17 based rates in its tariff, to be approved by the Commission, to be offered to EGSs and

18 customers for installation, initial testing and maintenance services for commercial and

19 industrial customer advanced meters.

' Appendix C coniains: (1) the original Appendix C to the PECO Settlement; (2) the comprehensive PECO Energy Company Competitive Mclering Specifications; (3) the comprehensive PECO Energy Company Competitive Billing Specifications as approved by the Commission in PECO's restructuring docket: and (4) the Commission's Order of July \, 1998 implementing competitive billing and meicring standards (Commission Docket No. R-O0973953 and P-O0971265).

29

2 G.2. Commercial and Industrial Billing. In consultation with the

3 Joint Petitioners and subject to operational constraints, effective September 1, 1999, a

4 Commission-licensed EGS may (in addition to any other rights to act as agent for the

5 customer set forth in West Penn's tariffs) act as agent to provide a single bill and

6 provide associated billing and collection services to commercial and industrial

7 customers located in West Penn's service territory, subject to the ability df the EGS to

x comply with Appendix C.

y

i " G.3. Residential Metering. In consultation with the Joint

11 Petitioners regarding operational constraints, effective September 1, 1999, a

12 Commission-licensed EGS may provide, finance, own, calibrate and remotely read

13 advanced meters for service to residential customers located in West Penn's service

14 territory subject to the ability of the EGS to comply with Appendix C. An EGS shall

15 not install, initially test or maintain advanced meters for service to residential

16 customers located in West Penn's service territory prior to January 1, 2003. Prior to

17 January 1, 2003, all advanced meters for residential consumers shall be installed,

18 initially tested and maintained by West Penn.

iy

2i> G.3.a. For the period between September 1, 1999 and December

21 31, 2002, West Penn employees will install and initially test one EGS-provided

22 advanced meter per year for each residential account, and will maintain such meter,

30

1 without assessing any additional fees or charges on the customer or the EGS. Starting

2 August I , 1999, West Penn shaii maintain cost-based rates in its tariff for installation,

initial testing and maintenance of additional advanced residential meters. Neither West

4 Penn nor any EGS shall assess any fees or charges to residential customers for meter

5 testing or maintenance, except as permitted by 52 Pa. Code Chapters 56 and 57.

6

7 G.3.b. Starting October 1, 2002, West Penn shall include cost-

fi based rates in its tariff, to be approved by the Commission, to be charged to EGSs and

9 customers for installation, initial testing and maintenance services for residential

ID advanced meters.

11

12 G.4. Residential Billing. Effective September 1, 1999, a

13 Commission-licensed EGS may (in addition to any other rights to act as agent for the

14 customer set forth in West Penn's tariffs) act as agent to provide a single bill and

15 provide associated billing and collection services to its residential customers located in

ifi West Penn's service territory, subject to the ability of the EGS to comply with

17 Appendix C.

is

'9 G.5. Manual Meters. West Penn, as the EDC, shall provide,

20 finance, install, own, maintain, calibrate and read all manual meters that are used to

21 provide service to retail electric customers located in West Penn's service territory.

7T

31

1 G.6. Billing and Metering Credits. West Penn will unbundle its

2 retail electric rates for metering, metering services, meter reading, and billing and

3 collection services to provide credits for those customers that have the right and elect to

4 have an EGS perform these services. The unbundled rates for each customer class are

? set forth in Appendices B and D.

6

7 G.7. Determination of potential implementation impediments for

8 Competitive Metering and/or Billing on September 1, 1999. The Bureau of Audits,

y working with a third party consultant, shall conduct a review of any constraints raised

10 by West Penn that may prevent implementation of competitive metering and/or billing

11 on September 1, 1999. The third party consultant, who shall possess expertise in the

12 area of utility billing and metering systems, will be selected by the Commission, in

13 consultation with the Joint Petitioners. The review will examine those constraints which

u cannot reasonably be overcome in time to implement competitive metering and/or

15 billing by September 1, 1999 and. if constraints are identified, will provide a

16 recommendation as to when those constraints can be eliminated. The cost of the third

17 party consultant shall be borne by West Penn at a cost not to exceed $100,000. The

18 review shall be completed no later than June 30, 1999, and a report shall be submitted

19 to the Commission and provided to the Joint Petitioners.

20

32

1 G.8. Development of Standards. By March 1, 1999, the Joint

2 Petitioners agree to modify Appendix C only as necessary to assure the standards are

3 consistent with West Penn's systems and the provisions set forth in this Part.

4

5 G.9. Commission Standards. Regardless of whether the Joint

fi Petitioners reach agreement on the development of standards, by August 1, 1999, the

7 Commission shall establish metering and billing standards for the West Penn service

8 territory which adopt Appendix C and include only such modification to Appendix C

y necessary to make the standards consistent with West Penn operational systems,

w including the specific applicability of provisions contained within 52 Pa. Code Chapters

11 56 and 57 to EGSs performing consolidated billing. Upon the entry of a final

12 Commission order, these standards will be applicable to those services being offered by

13 the EDC or the EGS. These Commission standards shall also include, at a minimum,

14 data exchange and billing format standards to facilitate the efficient, speedy and non-

15 discriminatory exchange of information between West Penn and EGSs necessary to a

ifi properly functioning competitive market for retail electric generation services. An EGS

P that bills EDC charges must comply with all billing and disclosure requirements for

is EDC charges applicable to an EDC, absent waiver by the Commission, including the

iy unbundling of transmission and distribution rates.

2l»

21 G.10. Physical Disconnection. Only West Penn EDC employees

22 can physically disconnect or reconnect a customer's distribution service. Physical

33

1 termination of service for nonpayment may only be permitted for failure to pay for

2 EDC or PLR service.

3

4 H. Phase-In

5 H.I . Direct access to electric generation suppliers will be phased

6 in for all customers located in West Penn's service territory in accordance with the

7 West Penn Restructuring Order, in three steps — one-third of the non-coincident

« peak load of each customer class of service will have access on January 1, 1999,

l) two-thirds of the non-coincident peak load of each customer class on January 2,

io 1999, and the remainder on January 2, 2000.

11

12 H.2. In the event the Commission determines that an additional

13 six-month transition period is necessary prior to implementation of retail access on a

14 statewide basis, pursuant to Section 2806(c)(1) and/or (c)(2) of the Public Utility

15 Code. West Penn's service territory will be subject to a similar six-month extension.

16 66 Pa. C.S. §2806(c)(l) and (c)(2).

17

is I. EGS Function

l y 1.1. As set forth in Appendix I , West Penn shall continue to

20 operate functionally separate delivery and supply units. West Penn shall be permitted

21 to have an EGS function subject to the Commission's Competitive Safeguards and

22 Code of Conduct in Appendices G and H. Notwithstanding the above, West Penn is

34

1 permitted to create an EGS that is structurally separate-from West Penn EDC and

2 West Penn GENCO that can serve retail load both inside and outside of West Penn's

3 current certificated service territory and such structurally separate EGS shall be bound

4 by the Competitive Safeguards and Code of Conduct in Appendices G and H.

5

6 1.2. The interim EGS license granted to West Penn shall remain

7 in effect and West Penn will be permitted to provide generation supplier services under

« such license to customers to which it was providing service on the date this settlement

y is approved by the Commission through the end of the last billing month of the contract

10 under which service is being provided to customers as of the date of this agreement.

11 Upon application, compliance with all applicable Commission regulations and notice to

12 all Joint Petitioners, West Penn may, pursuant to this Part I or Part K herein, transfer

13 such license to an affiliated corporation, even if West Penn may no longer provide

n service under such license.

15

ifi 1.3. The Commission will develop Codes of Conduct, separate

i? and distinct from Codes of Conduct established in this proceeding, which will apply to

18 EDC activities in the marketplace and which will clarify the PLR function. Issuance

19 of Interim Guidelines Addressing Electric Distribution Companies' Activities Relating

20 to Their Provider of Last Resort Function, Docket No. M-00960890 F. 0017.

21

22

35

2 J. Code of Conduct

3 J.l. West Penn further agrees that it will be subject to and

4 governed by the Code of Conduct set forth in Appendix H to this Joint Petition upon

5 final Commission approval of this Settlement. The Code of Conduct set forth in

o Appendix H shall remain applicable to West Penn until the later of January 1, 2001, or

7 the date when the statewide generic code of conduct established by the Commission in

8 its rulemaking becomes effective,

y

in K. Transfer of Generating Assets

11 K. l . West Penn and its subsidiaries are pennitted, but not

12 required, to transfer, lease or assign all of their generating assets and liabilities, as

13 those assets and liabilities are delineated in its Restructuring Plan filing and included at

u the date of transfer in the accounts set forth in Appendix J hereto, and any other assets

i? necessary for the operation of the generating plants, and their wholesale power

16 purchase contracts (other than PUC-approved contracts with qualifying facilities selling

17 power to West Penn) to a separate corporate entity or entities. The entity or entities

18 may, at West Penn's discretion, be an affiliate or subsidiary of West Penn or its parent

19 or a non-affiliate. If an affiliate, such entity or entities may function as an EGS (as set

20 forth in Section I above) outside of West Penn's service territory starting January 1,

21 1999, and as an EGS inside West Penn's service territory after January 1, 2004, as set

22 forth in more detail in the Competitive Safeguards and the Code of Conduct attached

36

1 hereto as Appendices G and H. Such entity may also receive an EGS license as set

2 forth herein.

3

4 K.2. The wholesale power purchase contracts transferred will

5 exclude those wholesale power purchase contracts that West Penn utilizes to satisfy its

r> provider of last resort obligations. West Penn shall also assign any market price based

7 retail contracts entered into under West Penn's interim EGS license prior to the date of

s this agreement. The generating assets and liabilities shall be transferred at their net

*) book value at the date of transfer. Once the transfer is completed, the generation entity,

10 if an affiliate ofWest Penn, will be regulated by the Commission only if it makes retail

11 sales, and then only as an EGS.

12

13 K.3. West Penn hereby requests, and the effectiveness of this

u Settlement is conditioned upon, the Commission's approval, without addition, condition

15 or modification, of all aspects of West Penn's transfer of its generation assets and

16 liabilities and wholesale power purchase contracts under this Settlement and licensing as

n an EGS of the entity receiving such assets, and the Commission's issuance of such

18 orders and certificates of public convenience as are necessary to implement those

19 transfers. The Commission approval includes, but is not limited to, approval under

2i) Chapters 5, 11, 19, 21, and 28 of the Public Utility Code (66 Pa.C.S.). The

21 Commission's approval shall expressly contain the statements required by section 32(c)

22 of the Public Utility Holding Company Act of 1935, 15 U.S.C. §79z-5a(c), to wit: that

37

1 the transfer (1) will benefit consumers, (2) is in the public interest and (3) does not

2 violate state law.

3

4 K.4. The Joint Petitioners expressly acknowledge that such

5 transfers may require various regulatory -approvals or waivers, including, without

6 limitation, the FERC, the Securities and Exchange Commission and perhaps other

7 agencies and third parties not subject to West Penn's control, and therefore the Joint

8 Petitioners will neither oppose, nor support any opposition to, West Penn's requests to

9 obtain such approvals. If such authorizations or waivers (other than approval by this

10 Commission) are not obtained in a manner acceptable to West Penn, then West Penn

11 will not transfer the generation assets or liabilities or contracts affected, provided,

12 however that if a generating asset, liability or contract is not transferred. West Penn

13 will continue to separate that asset, liability or contract and its operation from its

u regulated transmission and distribution functions by organizing generation assets,

1? liabilities or contracts into a functionally separate business unit or units. Failure to

16 obtain such authorization or waiver will not affect any other aspects of this Settlement.

17

is K.5. West Penn and its affiliates and subsidiaries agree to be

19 bound by the competitive safeguard provisions set forth in Appendix G. Upon request

20 of a Joint Petitioner the information referenced in paragraph 8 of Appendix G shall be

21 provided directly to the Joint Petitioner, who shall not disclose or use the information

22 in a manner that violates the Commission's standard rules governing proprietary

38

1 information. Complaints under these provisions shall be filed with the Commission and

2 finally adjudicated by the Commission within sixty days of filing.

4 K.6. In the event West Penn transfers its assets as set forth in

5 this section, the affiliate to which such assets are transferred shall offer its owned

6 capacity and associated energy in the amounts set forth in paragraph 7 of Appendix G,

7 at non-discriminatory terms, rates and conditions to unaffiliated licensed EGSs through

« the year 2002.

y

io L. Miscellaneous

l l

12 L . l . All parties will commit to work with all other parties to

i ' support and successfully implement all aspects of the Settlement Agreement. 14

\? L.2. Not later than November 30, 1998, the Company shall file

ifi with the FERC, with service on the Joint Petitioners, such provisions of the Settlement

r Agreement (including Appendix F and other appendices) that the Company believes

is require FERC approval in order to effectuate the Settlement Agreement including

iy filings necessary to adjust the Allegheny Power System Power Supply Agreement and

20 the Allegheny Generating Company Power Agreement. The filings shall include only

21 such provisions as have been agreed to by the Joint Petitioners. The Joint Petitioners

agree to support or not to oppose such filings.

39

1 L.3. West Penn and AEC agree that the Company will provide

2 AEC the option, at AEC's sole discretion, to terminate, effective May 1, 1999, the

3 generation capacity and energy services portions of the 1974 Electric Service

4 Agreement, as amended, ("ESA") for the delivery points designated in the ESA with

5 no continuing generation obligation and without any additional contract costs, contract

r. penalties, stranded costs or extra contractual costs relating to generation services to

7 AEC other than any obligation arising from the buyouts of the Milesburg, Shannopin

8 and Burgettstown PURPA projects, as may ultimately be determined by specific final

9 rulings from FERC or other court of competent jurisdiction (the "Option"). However,

in the execution of the Joint Petition may not, in any way, be used to support the

11 existence of any such buyout obligations. AEC retains its full rights to oppose any

12 filing seeking recovery of such buyout costs from it. The Option, if exercised by AEC,

13 must be by a writing delivered to the Company at least 45 days in advance of May 1,

14 1999. Notwithstanding any other provisions of the Joint Petition, nothing in this Joint

15 Petition other than this paragraph shall be deemed a modification of the existing

ifi capacity and energy sale and purchase requirements of the existing ESA. Without

17 limitation of any existing rights to termination of the ESA, AEC shall decide whether,

18 at its sole option, to discontinue the generation service provisions of the ESA at least 45

19 days prior to May 1, 1999. Even if AEC exercises the Option, the delivery service

20 provisions of the ESA may, at AEC's sole option, remain in effect as provided for in

21 the ESA as agreed to by the Company and AEC. Notwithstanding any provision of this

22 Joint Petition, AEC retains any and all rights AEC may have under the ESA and may

40

1 participate in any proceeding regarding the transfer of West Penn generating assets to

2 protect AEC's rights under the ESA; provided that AEC shall not oppose the transfer

.1 of any generating assets, as provided in Paragraph K hereof.

4

5 M. Resolution of Other Issues

d M. l . Any issue not specifically addressed in this Settlement and

7 related agreements shall be treated and resolved in accordance with the resolution of

s that issue adopted by the Commission at this docket in the Restructuring Order entered

y May 29. 1998, the Reconsideration Order entered July 21, 1998, and Compliance

HI Orders entered July 28, 1998 and September 17, 1998.

11

12 N. Withdrawal of Pending State And Federal Court Cases

13 N. l . Within ten days of the execution of this Joint Petition by all

u of the Joint Petitioners, the Petitioners in the following cases with the concurrence and

15 support of the Commission and other parties and intervenors that are Joint Petitioners

id hereto, shall petition the Commonwealth Court to continue generally further

i " consideration of their respective actions (all such actions collectively referred to as the

is "Commonwealth Court Actions"):

20

21 1592 CD. 1998 Hospital Shared Services and Administrative Resources, Inc., 22 Petitioners v. PaPUC, Respondent 23 1700 CD. 1998 West Penn Power, Petitioner v. PaPUC, Respondent 24 1798 C.D. 1998 Irwin A. Popowsky, Consumer Advocate, Cross-Petitioner v 2? PaPUC, Respondent 2('i 1821 CD. 1998 West Penn Power Industrial Intervenors, Petitioner v. PaPUC, 27 Respondent

41

A i 2076 C.D. 1998 West Penn Power, Petitioner, v. PaPUC, Respondent 2 2225 C.D. 1998 Irwin A. Popowsky, Consumer Advocate, Petitioner v. PaPUC, 3 Respondent 4 2308 C.D. 1998 West Penn Power, Petitioner, v. PaPUC, Respondent 5 2771 C.D. 1998 West Penn Power Industrial Intervenors, Petitioner v. PaPUC, 6 Respondent 7 2793 C.D. 1998 West Penn, Petitioner v. PaPUC, Respondent x 2310 C.D. 1998 Citizen's Power, Inc. and the Pa. Public Interest Research 9 Group, Petitioners v. Pa. PUC, Respondent

io 798 M.D. 1998 West Penn Power, Petitioner, v. PaPUC, Respondent 11

12 N.3. Within ten days of the execution of this Joint Petition by all

13 of the Joint Petitioners, West Penn shall petition the United States District Court to

14 continue generally its action filed at Civil Docket No. 98-1117 (W.D.Pa.).

15

io N.4. Within ten days after the Commission's approval of this

17 Joint Petition becomes final and no longer subject to administrative or judicial

is challenge, West Penn shall (a) withdraw with prejudice all of its pending

19 Commonwealth Court Actions, (b) withdraw with prejudice all of its pending

20 Commonwealth Court Reconsideration Actions and (c) dismiss with prejudice,

21 pursuant to Rule 41(a)(1), its pending civil action before the U.S. District Court, and

22 the other Joint Petitioners shall similarly withdraw with prejudice all of their

23 Commonwealth Court Actions and Commonwealth Court Reconsideration Actions.

24

25 N.5. The Joint Petitioners agree that they shall not initiate or join

26 in any court challenge, arising out of the issues resolved by this Settlement, to the

27 constitutionality or legality of the Electric Competition Act such that would prevent or

42

1 preclude implementation of this Settlement or any of its terms, this Joint Petition for

2 Settlement or any order approving this Joint Petition, except as provided in Paragraph

3 P.I., and provided that, notwithstanding any other provision of this Joint Petition,

4 nothing in this Joint Petition shall prevent any Joint Petitioner that is a party to the

5 restructuring proceedings of another utility from initiating or continuing any court

fi challenge, including a challenge to the constitutionality or legality of the Electric

7 Competition Act, arising from such proceedings.

y O. Effectiveness, Duration And Enforcement Of Settlement

io O.l. The settlement proposed herein will go into effect upon the

n Commission's issuance of a final order approving this Joint Petition and all the

12 settlement terms and conditions without modification. The terms of this Settlement shall

13 be implemented and enforceable notwithstanding the pendency of a legal challenge to

14 the Commission's approval of this Joint Petition or to actions taken by another

15 regulatory agency or Court, unless such implementation and enforcement is stayed or

if- enjoined by the Commission, another regulatory agency, or a Court having jurisdiction

17 over the matter.

is

19 0.2. The obligations under this Settlement that apply for a

20 specific term set forth herein shall expire automatically in accordance with the term

21 specified, and shall require no further action for their expiration. This Settlement,

22 including all of the terms and conditions set forth above, shall expire on December 31,

43

1 2008 except with respect to those aspects of this Settlement, orders of the Commission

2 implementing this Settlement or West Penn's tariff approved as part of this Settlement,

3 implementation of which necessarily must be completed beyond that date.

4

5 O.3. The Joint Petitioners may enforce this Joint Petition through

6 any appropriate action before the Commission or through any other available remedy.

" Joint Petitioners shall consider any final Commission order related to the enforcement

« or interpretation of this Joint Petition as an appealable order to Commonwealth Court.

9 This shall be in addition to any other available remedy at law and equity.

10

n 0.4. If a court grants a legal challenge to the Commission's

12 approval of this Joint Petition and issues a final non-appealable order which prevents or

13 precludes implementation of any material term of the Settlement, or if some other legal

M bar has the same effect, then this Settlement is voidable, upon written notice by any

15 Joint Petitioner.

if)

17 P. Complete Agreement; No Alterations Or Modifications

P.l. This Settlement resolves, with prejudice, all of the issues

iy specifically addressed herein and precludes the Joint Petitioners from asserting contrary

20 positions with respect to any such issue during subsequent litigation, provided,

21 however, that this Settlement is made without admission against or prejudice to any

22 factual or legal positions which any of the Joint Petitioners may assert: (i) in the event

44

1 that the Commission does not issue a final, non-appealable Order approving this

2 Settlement without modification; or (ii) in other Pennsylvania utilities' Restructuring

3 proceedings before the Commission under Section 2806(d) of the Electric Competition

4 Act and related appeals; or (iii) other proceedings before the Commission or other fora

5 as long as such positions are not in derogation of this Settlement. The Joint Petitioners

fi agree that this Settlement shall not constitute or be cited as controlling precedent in any

" other proceedings, including Pennsylvania utilities' restructuring proceedings before the

8 Commission under Section 2806(d). This Settlement is determinative and conclusive of

y all of the issues addressed herein and constitutes a final adjudication as to the Joint

io Petitioners of the matters thereof.

i l

i2 P.2. This Settlement is expressly conditioned upon the

15 Commission's approval of all of the specific terms and conditions contained herein

14 without modification. If the Commission should fail to grant such approval, or should

15 modify any of the terms and conditions herein, this Settlement will terminate and be of

i(> no force and effect. The Joint Petitioners will make best efforts to support this

17 Settlement and to secure its approval by the Commission.

is

19 P.3 It is expressly understood and agreed that this Settlement

20 constitutes a negotiated resolution solely of West Penn's restructuring proceedings at

21 Docket No. R-00973981 and the related court appeals and other actions listed herein.

45

J

2 IV. PUBLIC INTEREST CONSIDERATIONS

3 The Joint Petitioners submit that this Settlement is in the public interest

4 and should be approved in full for the following reasons:

6 1. Competition Will Be Promoted. Customers will receive shopping

" credits that may allow shopping customers to achieve bill savings. In addition, there

« will be an immediate overall 2.5% rate decrease in 1999.

y

io 2. Transmission And Distribution Charges Will Be Capped For An

n Additional Period. The Settlement provides that the cap on West Penn's transmission

12 and distribution charges, which otherwise would expire on June 30, 2001, will be

13 extended through 2005.

14

15 3. Generation Rates Will Be Capped For An Additional Three

ifi Years. The Settlement provides that a cap on West Penn's generation rates, which

n otherwise would expire December 31, 2005, will be in place as provided in the Electric

is Competition Act (66 Pa. C.S. §2804(4)), until December 31, 2008 and is increased as

iy set forth in Appendix A hereto.

20

21 4. Universal Service Coverage Will Be Expanded. The Settlement

22 provides for expansion of funding levels for West Penn's LIPURP and LIURP

46

1 programs. In addition, non-shopping customers will be served by the West Penn EDC

2 in its roJe as a provider of last resort or a competitive provider of last resort that will

offer electric service at market determined rates.

4

5 5. Economic Development and. the Environment Will Benefit. The

(y Settlement is intended to promote competition to the benefit of business and industry as

7 well as to residential consumers. The Settlement promotes renewable energy

* development and provides for a renewable energy pilot program. The Settlement also

9 provides for a sustainable energy fund designed to promote the development and use of

10 renewable energy and clean energy technologies, energy conservation and efficiency

11 which promote clean energy.

12

1? 6. The Securitization of Stranded Assets Will Be Facilitated. The

14 Settlement provides for the Commission to issue a Qualified Rate Order authorizing

15 West Penn to securitize up to $670 million ($630 million in the event of a merger with

if) DQE) of its recoverable stranded assets and costs.

17

18 7. Substantial Litigation And Associated Costs Will Be Avoided.

19 The Settlement amicably resolves a number of important and contentious issues raised

2n in the proceeding and, at the same time, provides for the withdrawal of various actions

21 currently pending before state and federal courts. The administrative and appellate

47

! burden and costs to litigate these matters, including likely future appeals, to conclusion

2 would be substantial.

i

4 8. The Settlement Is Consistent With Commission Policies

5 Promoting Negotiated Settlements. The Joint Petitioners arrived at the settlement

6 terms after conducting extensive discovery, submitting comprehensive testimony and

7 engaging in in-depth discussions. The settlement terms and conditions constitute a

8 carefully crafted package representing reasonable negotiated compromises on the

y issues addressed herein. Thus, this Settlement is consistent with the Commission's

ui rules and practices encouraging negotiated settlements (see 52 Pa. Code §§5.231,

ll 69.391, 69.401).

48

1 V. CONCLUSION

2 WHEREFORE, the Joint Petitioners, intending to be legally bound,

3 respectfully request that the Commission: (1) approve the settlement terms and

4 conditions set forth in the Joint Petition without modification; (2) amend the

5 Commission's Restructuring Order and Reconsideration Order as necessary to

(* implement the proposed Settiement; (3) approve the Tariff Supplements attached as

7 Appendix B to become effective pursuant to the terms set forth therein; (4) issue the

8 Qualified Rate Order set forth in Appendix E hereto; (5) approve West Penn's transfer

y of generating assets as set forth herein; and (6) approve West Penn's establishment of a

io regulatory asset for certain CTC revenues as set forth herein.

! I

12 The undersigned counsel or representatives certify that they have full

13 authority to enter into this settlement and to act on behalf of their respective parties,

14 and each is executing this agreement as a duly authorized representative of such party.

15

20

21

22

23

2X

29

30

Michael P. Morrell Date is For West Penn 19

24 Irwin A. Popowsky, Esquire /\ Date 25 Tanya J. McCloskey, Esquire 26 Edmund J. Berger, Esquire 27 For Office of Consumer Advocate

49

2

}

4

5

6

7

K

9

10

11

12

13

14

15

16

17

IS

19

20

21

22

23

24

25

2f>

27

2S

29

30

31

32

33

34

35

36

37

38

39

40

41

42

43

44

45

Bernard A. Ryan, Jr., Esquirp Steven C. Gray, Esquire For Office of Small Business Advocate

Date

Charles F. Hoffman, Esquire Scott H. DeBroff, Esquire For Office of Trial Staff

Date

David M. Kleppinger, bsquire Derrick Williamson, Esquire For West Penn Power Industrial Intervenors

stow to Date

Kenneth Zielonis For Pennsylvania

Date ailers' Association

William T, Hawke, Esquire For Mid-Atlantic Power Supply Association

Date

Barbara Kates-Garnick Jeff Bladen For New Energy Ventures

Date

Kevin J. Moody, Esquire For Enron Power Marketing, Inc.

Date

50

y

JO

i i

12

13

14

15

16

1 arricia Armstrong, Esquire

For Allegheny Electric Cooperative, Inc. Date

tthleen O'Reilfy, Esq. For Environmentalists

Date

Mark Sundback, Esquire Date For Hospital Shared Services/Administrative Resources, Inc.

18 iy

20

21

22

23

24

25

26

27

28

2')

30

31

32 ^

34

35

36

37

38

3y

40

41

42

43

Charles E. THbmas, Jf. iaSquire For Pennsylvania State University

Date

Eugene Brady For Community Action Association of Pennsylvania

Date

For: Date

For:

For:

Date

Date

51

Nov.-onmuE) I5:U2IIB _; rr-fcm^

Patricia Armstrong, Ewpiire For Allegheny Electric Cooperative, Inc.

Kathleen O'Reffly. E«i-For Enviramneattlists

^ ' i t s - • V-

Mark Sundback, Esquire ' . ^ 3 1 ^ ^ For Hospital Shared Services/Adrainifltrative Resources;inc >k ' ^ r •

2 3 4 5 6 7 8 9

10 11 12 13 14 15 Ifi 17 18 19 20 21 22 23 24 25 26 27 2B 29 30 31 32 33

34 For: 35 36 37 38

* ^

T" ^

Charles E. Thomas, Jr.. Esquire For Pexinsy Wania State Univenity

Eugen»raay ^ For Community Action Association of Pennsylvania

Date

r t

39 For; AO 41 42

Date,

43 For: 44

i

Date

52 •i- f ;:':.:;":.r i '

RECEIVED TIMENOV. 3. l : \ m i \ - ^ ••iWlHT-J-iMENOV. 3. 4:17PM

V. - T . 1 CV' 1 WWW ' " W • U *

i 2 3 4 5 6 7 8 9

10 11 12 13 14 IS Ifi 17 IB

2^1 • " i

PAtzicit Armftraog* Baqqko..-; For AUsfftMa^Oceeic Coop«iaUvt, Inc.

lUthlean O-RaiUy, Boq. For Bnvirnnmamalfnrn

Mark SundbAck, fitquixc For Hospital Shared Services/ Administrative Keeourdas, Inc.

19 20 21 22 23 24 23 26 27 28 29 30 31 32 32 34 35 36 37 38 39 40 41 42 43 44

5 1 Charles E . Thomas, Jr., Enquire t For Pennsylvania State University

Eugene Brady For Community Action Association of Peansylvanfe

For:

For:

For:

r.--.6: . . ' S r .

Date

Dale

Oai

• 4

Dale

Dale

P. 2

51

ii " % .

. - - ^ i r : i - I

--v-rr RECEIVED T1MEN0V. 3. ~ 5:19PU. ,„M1HT TIMENOV. 3. 5:20PM

The undersigned counsel certifies that she has full aumority^^on behalf of

PECO Energy Company in this proceeding and does n o t t o ^ , g p ) ^ d e by,

the terms of this settlement of the West Penn restmcturirjg:^

court proceedings.

Mbry WTcFall Hopper, Esquire for PECO Energy Company

- ^ T •-

November:3,,i998^ w

124598

• _ r:- --:- . i •

RECEIVED TIMENOV. 3. 5:04PM PRINT TIMENOV. 3. 5:05PM

CONFIDENTIAL

West Penn Power: SETTLEMENT SCENARIO - NO MERGER CTC, T&D and Shopping Credit In Cents per kwh Declining CTC Revenue Requirement with kwh consumption as Indicated (See Notes) Stranded: $ 670,000,000

Pre-Tax Return: 11.00% |Years 10

monthly convention

S 670,000,000

Bundled Year kwh CTC Revenue CTC Regulatory Book CTC CTC Rale T&D Rale Shopping

Consumed Requirement Asset Revenue with GRT Rate Today Credit

1999 20,740,356,054 s 122.379,208 $ 25,000,000 $ 147,379,208 0,62 1.59 5.37 3.16 2000 21,157.129,827 $ 120,708,339 $ 45,000,000 $ 165,708.339 0.60 1.73 5.51 3.18 2001 21,490,379,799 $ 115,298,313 $ 60,000,000 $ 175,298.313 0.56 1.73 5.51 3.22 20O2 21,860,285,533 $ 112,946,724 $ 50,000,000 $ 162,946,724 0.54 1.73 5.51 3.24 2003 22,146.129,867 $ 112.281,400 $ - $ 112,281,400 0.53 1.73 5.51 3.25 20O4 22,693,010,835 s 104.172,492 $ - $ 104,172,492 0.48 1.73 5.51 3.30 20O5 23.102,818,329 $ 99,268,835 $ (5,000,000) $ 94,268,835 0.45 1.73 5.51 3.33 2006 23,405,954,334 $ 97,559,763 $ (45,000,000) $ 52,559.763 0.44 5.79 3.62 2007 23,697.105,433 $ 96,507,884 S (60,000,000) $ 36,507,884 0.43 5.79 3.63 2008 23.934,076,483 $ 97,472.963 $ (70,000,000) $ 27,472,963 0.43 6.07 3.91 Total $ 1,078,595,921 $ - $ 1,078,595.921

Noles:

GRT Gross-up Is 1/(1-GRT), or 1.0460251, to reflect payment of the GRT on the GRT revenue receipt.

West Penn Power Stranded Cosl

Return and Recovery Nonmerger

CTC CTC Stranded CTC Rate Revenue 0 Return Cost

Year Sales with GRT Total Excl. GRT @ 11 % Recovery (mWh) (cents/kWh) ($000) ($000) ($000) ($000)

1999 20,740,356 0.62 128,547 122,891 71,259 51,632 2000 21,157,130 0.60 126,890 121,307 65,362 55.945 2001 21,490.380 0.56 120,367 115,071 59.212 55.859 2002 21,860,286 0.54 118,054 112.860 52,859 60,001 2003 22.146,130 0.53 117,381 112,216 45,942 66,274 2004 22,693,011 0.48 108,930 104,137 38,694 65,443 2005 23,102,818 0.45 103.950 99,376 31,366 68,010 2006 23,405,954 0.44 102.470 97,961 23,563 74,399 2007 23,697,105 0.43 101.374 96,914 15,000 81,914 2008 23.934,076 0.43 101,959 97,473 5,481 91,992

1.129,923 1.080,206 408,736 671,470

-a : cu '

t a ' ro i

r o '

o

AppendixAnonmerger.xls Appendix A 11/3/98

CONFIDENTIAL

West Penn Power: SETTLEMENT SCENARIO -MERGER CTC, T&D and Shopping Credit in Cents per kwh Declining CTC Revenue Requirement with kwh consumption as indicated (See Notes) Stranded: $ 630,000,000 Pre-Tax Return: 11.00% [Years 10 |

monthly convention

$ 630,000,000 |

Bundled

Year CTC Revenue CTC Regulatory Book CTC CTC Rate T&D Rate Shopping

Requirement Asset Revenue with GRT Rate Today Credit

1999 $ 122,379,208 $ 25.000,000 $ 147,379,208 0.62 1.59 5.37 3.16

2000 $ 118,905,000 $ 45,000,000 $ 163,905,000 0.59 1.73 5.51 3.19

2001 $ 113.135,762 $ 60,000,000 $ 173,135,762 0.55 1.69 5.46 3.22

2002 $ 111,510,000 $ 50,000,000 $ 161.510,000 0.53 1.69 5.46 3.24

2003 $ 104,580,000 $ - $ 104,580,000 0.49 1.69 5.46 3.28

2004 $ 97,650,000 $ - $ 97,650,000 0.45 1.69 5.46 3.33 2005 $ 90,720,000 $ (5,000,000) $ 85,720,000 0.41 1.69 5.46 3.37 2006 $ 83,790,000 $ (45,000,000) $ 38,790.000 0.37 5.79 3.73 2007 $ 76,860,000 $ (60,000,000) $ 16,860,000 0.33 5.79 3.77 2008 $ 69,930,000 $ (70,000,000) $ (70,000) 0.29 6.07 4.09 Total $ 989,459,970 $ 989,459,970

Notes: GRT Gross-up is 1/(1-GRT), or 1.0460251, to reflect payment of the GRT on the GRT revenue receipt.

West Penn Power Stranded Cost

Return and Recovery Merger

CTC CTC Stranded CTC Rate Revenue Revenue Return Cost

Year Sales with GRT Total Excl. GRT @ 11% Recovery (mWh) (cents/kWh) ($000) ($000) ($000) ($000)

1999 20,740.356 0.62 128.547 122,891 66,431 56,460 2000 21.184.047 0.59 124.938 119,441 60,073 59.367 2001 21.527.040 0.55 118,394 113,185 53,528 59,656 2002 21.886.374 0.53 116,053 110.947 46,737 64,210 2003 22.300,963 0.49 109,286 104.477 39,642 64,835 2004 22.851,950 0.45 100,709 96,278 32,567 63,711 2005 23,347.570 0.41 93.555 89,439 25,550 63,889 2006 23,855,534 0.37 88,191 84,311 18,421 65,890 2007 24,430.101 0.33 80,590 77,044 11,174 65,870 2008 25,094.134 0.29 73,042 69,828 3,927 65,902

1,033,306 987,840 358.049 629,792

AppendlxAmerger.xls Appendix A 11/3/98

•

WEST PENN POWER COMPANY Supplement No. 140 to Electric • Pa. P. U. C. No. 39

WEST PENN POWER COMPANY TRADING AND DOING BUSINESS AS ALLEGHENY POWER

TARIFF

Rate Schedules and Rules and Regulations

FOR

ELECTRIC SERVICE

IN

The Territory as Defined on Pages 3-1, 3-2, 3-3, 3-4, 3-5,3-6 and 3-7 of this Tariff

Issued November 3,1998 Effective January 1,1999

M. P. Morrell

Vice President

Cabin Hill

Greensburg, PA

NOTICE

THIS SUPPLEMENT IS FILED IN COMPLIANCE WITH COMMISSION ORDER AT DOCKET R-00973981 ENTERED ?????????, 1998

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

WEST PENN POWER COMPANY Page No. 1-1

LIST OF MODIFICATIONS MADE BY THIS SUPPLEMENT

CHANGES

This supplement cancels and supersedes ad previous pages of Electric-Pa. P. U. C. No. 39. It also adds a new table of contents and new rules, repaginates and standardizes the font and spacing for the entire tariff and unbundles all of the rates.

Issued November 3,1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 2-1 WEST PENN POWER COMPANY

TABLE OF CONTENTS

Paragraph Page No. Title Page List of Modifications Made by this Supplement 1-1 Temto/y to Which Tariff Applies 3-1 3-2 3-3 3-4 3-5 3-6 3-7 Rules and Regulations

Definitions 4-1 4-2 4-3 Service Availability

Character of Electric Service 1 4-4 Type of Distribution 2 4-4

Customer's Installation Safety 3 4-4 Liability 4 4-5 Use of Equipment 5 4-5 Capacity 6 4-5

Application for Residential Service Application 7R 4-6 Establishing and Maintaining Credit 8R 4-6 4-7 4-8

Application for Nonresidential Service Application 7N 4-8 Establishing and Maintaining Credit 8N 4-8 4-9

Selection of Rate Schedule 9 4-9 Company's Facilities on Customer Premises

Right of Way 10 4-9 Access to Customer's Premises 11 4-9 Maintenance and Removal 12 4-9 Damage and Loss 13 4-10 Connection 14 4-10 Tampering 15 4-10

Relocation of Facilities Customer's Facilities 16 4-10 Company's Facilities 17 4-11

Supply of Sen/ice Continuity of Service 18 4-11 4-12 Metering 19 4-124-13

Customer's Use of Service Restrictions on Use of Residential Service 20R 4-14 Restrictions on Use of Nonresidential Service , 20N 4-14 Auxiliary Power Sources and Readiness to Serve 21 4-14 4-15

Payment for Sen/ice Biliing 22 4-15 4-16 Payment of Bills 23 4-16 Billing Adjustments 24 4-16 4-17

Termination, Interruption, and Discontinuance of Residential Service-Discontinuance of Service by Residential Customer

Notice of Discontinuance 25R 4-17 Transfer of Agreements 26R 4-17 Company's Right to Terminate Residential Service 27R 4-18 4-19 4-20

4-21 4-22

Issued Novembers, 1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 2-2

WEST PENN POWER COMPANY

TABLE OF CONTENTS (Continued)

Paragraph Page No.

Discontinuance of Service by Nonresidential Customer Notice of Discontinuance 25N 4-22 Transfer of Agreements 26N 4-22

Disconnection of Nonresidential Service by Company Company's Right to Disconnect Nonresidential Service 27N 4-22 4-23

Extension of the Company's Facilities Single Phase Line Extension Plan 28 4-24 4-25 Polyphase Line Extension Plan 29 4-25 U n d e r g r o u n d Electr ic Se rv i ce in N e w Res iden t ia l D e v e l o p m e n t s 30 4 - 2 5 4 -26 4 -27 4 -28

Residential Underground Electric Service Not in a Development 31 4-29 Emergency Load Control and Conservation

Emergency Load Control 32 4-30 Emergency Energy Conservation 33 4-30 Residential Building Energy Conservation Standards 34 4-31

Taxes and Contract Provisions Taxes on Contributions in Aid of Construction (CIAC) and Customer Advances (CAC) 35 4-31 Individualized Contracts 36 4-31 4-32 Individualized Company Facilities and Services 37 4-32 Changing Electric Supplier 38 4-32 Payment Processing 39 4-33 Setf-Generation Competitive Transition Charge 40 4-33 Code of Conduct 41 4-34 4-35

Tax Surcharge 5-1 Sustainable Energy Surcharge 5-2 Competitive Transition Charge (CTC) 5-3 5-4

Electric Service Rate Schedules

Domestic Service Schedule 10 6-16-2 General Service Schedule 20 7-1 7-2 7-3 Church and School Service Schedule 22 8-1 8-2 8-3 8-4 Athletic Field Lighting Service Schedule 23 9-1 9-2 Fair and Carnival Service Schedule 24 , 10-1 10-2 General Power Service Schedule 30 11-1 11-2 11-3 11-4 Reserved 12 Primary Power Service Schedule 40 13-1 13-2 13-3 13-4 Primary Power Sen/ice Schedule41 14-1 14-214-3 14-4 Primary Power Sen/ice Schedule 44 15-1 15-2 15-3 15-4 Primary Power Service Schedule 46 16-1 16-2 16-3 16-4

Issued November 3,1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 2-3 WEST PENN POWER COMPANY

TABLE OF CONTENTS (Concluded)

Page No. Street and Area Lighting Rate Schedules

Street Lighting Service Schedule 51 17-1 17-2 17-3 17-4 Outdoor Lighting Service Schedule 52 18-1 18-2 Street and Area Ughting Schedule 53 19-1 19-2 19-3 19-4

19-5 Street Lighting Service Schedule 54 20-1 20-2 20-3 20-4 Area Lighting Service - Underground Distribution Schedule 55 21-1 21-2 21-3 21-4 Street Lighting Service - Customer-Owned Equipment Schedule 56 22-1 22-2 22-3 22-4

22-5 Outdoor Lighting - Equipment, Maintenance, and Unmetered Service Schedule 57 23-1 23-2 23-3 23-4

23-5 23-6 23-7 23-8 23-9

Outdoor Lighting - Maintenance and Unmetered Service Schedule 58 24-1 24-2 24-3 24-4 24-5 24-6

Outdoor Ughting - Equipment and Maintenance Service Schedule 59 25-1 25-2 25-3 25-4 25-5 25-6 25-7 25-8

Mercury Vapor Street and Highway Lighting Service Schedule 71 26-1 26-2 26-3

Other Service and Riders

Cogeneration Schedule 85 27-1 27-2 27-3 Alternative Generation Rider Schedule 86 28-1 28-2 28-3 28-4

28-5 28-6 28-7 28-8 28-9

Opportunity Power Rider 29-1 29-2 Curtailment Service Rider 30-1 30-2 Experimental Shoulder-Peak Rider 31-1 Experimental Saturday and Holiday Load Option Rider 32-1 Surge Suppression Service Schedule 90 33-1 33-2 Net Energy Metering Rider 34-1 34.2 34-3

NOTE: All pages are Original unless otherwise indicated. '•First Revised, 2second Revised, etc

Issued Novembers. 1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 3-1 WEST PENN POWER COMPANY

TERRITORY TO WHICH WEST PENN POWER COMPANY'S RATE SCHEDULES AND RULES AND REGULATIONS APPLY

ADAMS COUNTY Borough of Carroll Valley

Townships

Franklin Hamiltonban Liberty

ALLEGHENY COUNTY Boroughs

Bethel Park Brackenridge Bridgeville Cheswick

Elizabeth Jefferson Lincoln McDonald

Monroeville Oakdale Pleasant Hills Plum

Springdale Tarentum West Elizabeth White Oak

Townships

East Deer Elizabeth Fawn Findlay Forward

Frazer Harmar Hanison Indiana

North Fayette Scott South Fayette South Park

South Versailles Springdale Upper St. Clair West Deer

Apollo Applewold Atwood Dayton

ARMSTRONG COUNTY City of Parker

Elderton Ford City Ford Cliff Freeport

Boroughs

Townships

Krttanning Leechburg Manorville North Apollo

Rural Valley South Bethlehem West Kittanning Worthington

Bethel Boggs Bradys Bend Bun-ell Cadogan Cowanshannock East Franklin

Gilpin Hovey Kiskiminetas Kittanning Madison Mahoning Manor

North Buffalo Parks Perry Pine Piumcreek Raybum Redbank

South Bend South Buffalo Sugarcreek Valley Washington Wayne West Franklin

Continued on Page No. 3-2

Issued November 3,1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 3-2 WEST PENN POWER COMPANY

TERRITORY TO WHICH WEST PENN POWER COMPANY'S RATE SCHEDULES AND RULES AND REGULATIONS APPLY (Continued)

Cumberland Valley East Providence

Bruin Cherry Valley Chicora East Butler

Allegheny Brady Buffalo Butler Center Cherry Clay Clearfield

BEDFORD COUNTY

Borough of Hyndman

Townships

Londonderry Mann

Monroe

BLAIR COUNTY Townships

Rush Snyder

BUTLER COUNTY City of Butler

Boroughs

Gibson Grove

Eau Claire Fairview Harrisville Kams City

Townships

Clinton Concord Connoquenessing Donegal Fairview Franklin Jefferson

Petrolia Portersville Prospect Saxonburg

Lancaster Marion Mercer Middlesex Muddycreek Oakland Parker

CAMERON COUNTY

Boroughs

Driftwood Emporium

Townships

Lumber Portage

Southampton

Slippery Rock West Liberty West Sunbury

Penn Slippery Rock Summit Venango Washington Winfield Worth

Shippen

Continued on Page No. 3-3

Issued Novembers, 1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 3-3 WEST PENN POWER COMPANY

TERRITORY TO WHICH WEST PENN POWER COMPANY'S RATE SCHEDULES AND RULES AND REGULATIONS APPLY (Continued)

Bellefonte Centre Hall

CENTRE COUNTY Boroughs

Howard Miilheim

Milesburg Port Matilda

State College Unionviffe

Townships

Banner Boggs College Curtin Ferguson Gregg

Haines Halfmoon Hams Howard Huston Liberty

Marion Miles Patton Penn Potter

CLARION COUNTY Boroughs

Spring Taylor Union Walker Worth

Clarion East Brady

Brady Clarion Limestone

Hawthorne New Bethlehem

Townships

Madison Millcreek Monroe

Rimersburg Sligo

Perry Piney Porter

Strattanvilie

Redbank Toby

Beech Creek Chapman Leidy

CLINTON COUNTY Borough of Beech Creek

Townships

Gallager Grugan

Porter East Keating

West Keating Lamar

Johnsonburg Ridgway

ELK COUNTY Boroughs

St. Marys

Benezette Benzinger

Fox Highland

Townships

Horton Jay

Jones Ridgway

Continued on Page No. 3-4

Issued November 3,1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 3-4 WEST PENN POWER COMPANY

TERRITORY TO WHICH WEST PENN POWER COMPANY'S RATE SCHEDULES AND RULES AND REGULATIONS APPLY (Continued)

FAYETTE COUNTY Cities

Belle Vemon Brownsville Dawson Dunbar

Brownsville Bullskin Connellsville Dunbar Franklin Georges

Chambersburg Greencastle

Antrim Greene Guilford

Ayr Belfast Bethel

Connellsville

Everson Fairchance Fayette City Markleysburg

Boroughs

Townships

German Henry Clay Jefferson Lower Tyrone Luzerne Menallen

Uniontown

Masontown Newell Ohiopyle Perryopolis

Nicholson North Union Perry Redstone Saltlick South Union

FRANKLIN COUNTY Boroughs

Mercersburg

Hamilton Letterkenny Montgomery

Townships

Mont Alto

Peters Quincy St. Thomas

FULTON COUNTY

Boroughs

McConnellsburg Valley High

Townships

Brush Creek Dublin Licking Creek

Taylor Thompson Todd

Point Marion Smithfield South Connellsville Vanderbilt

Springfield Springhill Stewart Upper Tyrone Washington Wharton

Waynesboro

Warren Washington

Union Wells

Continued on Page No. 3-5

Issued November 3,1998 Effective Jaijuary 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 3-5

WEST PENN POWER COMPANY

TERRITORY TO WHICH WEST PENN POWER COMPANY'S RATE SCHEDULES AND RULES AND REGULATIONS APPLY fContinued)

Carmichaels Clarksville

Aleppo Center Cumberiand Dunkard Franklin

Brown Cogan House

GREENE COUNTY Boroughs

Greensboro Jefferson

Freeport Gilmore Gray Greene Jackson

Townships

Rices Landing

Jefferson Monongahela Morgan Morris Perry

HUNTINGDON COUNTY Township of Franklin

INDIANA COUNTY Borough of Saltsburg

Townships

Armstrong Conemaugh

JEFFERSON COUNTY Townships

Clover Ringgold

LYCOMING COUNTY Townships

Cummings McHenry

Waynesburg

Richhili Springhill Washington Wayne Whitely

Pine

Hamlin

McKEAN COUNTY Boroughs

Kane Mt. Jewett

Townships

Norwich Sergeant Wetmore

Continued on Page No. 3-6

Issued November 3,1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 3-6 WEST PENN POWER COMPANY

TERRITORY TO WHICH WEST PENN POWER COMPANY'S RATE SCHEDULES AND RULES AND REGULATIONS APPLY (Continued)

Austin

Allegany Clara Eulaiia Hebron

POTTER COUNTY Boroughs

Coudersport

Townships

Homer Keating Oswayo Pleasant Valley

Oswayo

Portage Roulette Steward son Summit

Sweden Sylvania Wharton

SOMERSET COUNTY Borough of Wellersburg

Townships

Fairhope Southampton

WASHINGTON COUNTY Cities

Monongahela Washington

Boroughs

Alienport Beallsville Bentleyville Burgettstown California Canonsburg Centerville Charleroi Claysville

Amwell Blaine Buffalo Canton Carroll Cecil Chartiers Cross Creek

Coal Center Cokeburg Deemston Donora Dunievy East Washington Ellsworth Elco

Townships

Donegal East Bethlehem East Finley Faltowfleld Hanover Hopewell Independence Jefferson

Finleyville Green Hills Houston Long Branch Marianna McDonald Midway New Eagle

Morris Mt. Pleasant North Bethlehem North Franklin North Strabane Nottingham Peters Robinson

North Charleroi Roscoe Speers Stockdale Twilight West Alexander West Brownsville West Middletown

Smith Somerset South Franklin South Strabane Union West Bethlehem West Finley West Pike Run

Concluded on Page No. 3-7

Issued November 3,1998 Effective January 1,1999

WEST PENN POWER COMPANY

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 3-7

TERRITORY TO WHICH WEST PENN POWER COMPANY'S RATE SCHEDULES AND RULES AND REGULATIONS APPLY (Concluded)

Arnold Greensburg

WESTMORELAND COUNTY Cities

Jeannette Lower Burred

Boroughs

Monessen New Kensington

Adamsburg Arona Avonmore Delmont Deny Donegal East Vandergnft Export Hunker

Allegheny Bell Cook Deny Donegal East Huntingdon

Hyde Park Irwin Latrobe Laurel Mountain Village Ligonier Madison Manor Mt. Pleasant Murrysville

Townships

Fairfield Hempfield Ligonier Loyalhanna Mt. Pleasant

New Alexandria New Stanton North Belle Vemon North Irwin Oklahoma Penn Scottdafe Smithton

North Huntingdon Penn Rostraver Salem Sewickley

South Greensburg Southwest Greensburg Sutersville Vandergnft West Leechburg West Newton Youngstown Youngwood

South Huntingdon St. Clair Unity Upper Burrell Washington

The Company's Rate Schedules and Rules and Regulations also apply in territory adjacent to the above named localities.

Issued Novembers, 1998 Effective January 1,1999

WEST PENN POWER COMPANY

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 4-1

RULES AND REGULATIONS

The following Rules and Regulations govern the supply of sen/ice by West Penn Power Company,

DEFINITIONS

Certain words, when used in the Rules and Regulations, Rate Schedules, and Agreements of West Penn Power Company, shall have the following meanings:

"Advanced Metering": A Customer's billing meter as defined in 52 Pa. Code Chapter 57, Subchapter O. Advanced Meter Deployment.

"Allegheny Power": Trade name of West Penn Power Company under Fictitious Names Act.

"Competitive Energy Supply": The unbundled energy and capacity provided by an Electric Generation Supplier pursuant to Customer Choice and Competition Act.

"Competitive Transition Charge {CTC)": A non-bypassable charge applied to the bill of every Customer accessing the transmission or distribution network which (charge) is designed to recover the Company's Transition or Stranded Costs as approved by the Commission.

"Company Charges": The sum of fixed and variable distribution charges, transmission charges, CTC and generation charges if PLR service is taken from Company.

"Customer": Any person, corporation, municipality, government agency, or other legal entity to whom the Company may furnish either residential or nonresidential service. Also, an end user of electricity. An EGS may act as an agent for an end use Customer upon written authorization to the Company, which authorization may be part of the notice of EGS selection. The agency relationship established between an EGS and an end use Customer does not impair the end use Customer's rights and continued receipt of important consumer protections contained in the Customer Choice and Competition Act relating to the EDC/Customer relationship.

"Customer Choice and Competition Act": The Electricity Generation Customer Choice and Competition Act, 66 Pa. C.S. §2801-2812 and Pennsylvania Public Utility Commission Orders pursuant thereto.

"Company": West Penn Power Company. West Penn Power Company trades and does business as Allegheny Power.

"Direct Access": Direct Access shall have the meaning as set forth in the Customer Choice and Competition Act. (N)

"Dwelling": A house, apartment, or single meter multi-unit structure being supplied with residential sen/ice.

"Electric Distribution Company (EDC)": West Penn Power Company.

"Electric Generation Supplier (EGS)": EGS shall have the meaning as set forth in the Customer Choice and Competition Act.

(N)

(N)

(N)

(N)

(C)

(N)

(N)

(N)

(C) Indicates Change (N) Indicates New

Continued on Page No. 4-2

Issued Novembers, 1998 Effective January 1, 1999

•

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 4-2

WEST PENN POWER COMPANY

RULES AND REGULATIONS (Continued)

"Electric Generation Supplier (EGS) Tariff": The Company's (EGS) Tariff, which governs the contractual anangements between the Company and EGS' regarding the supply of the EGS' loads during the implementation of Direct Access. ( N )

"Fixed Distribution Charge": A charge to recover the distribution costs, which are due to the presence of the Customer on the distribution system, regardless of the energy consumed or capacity required. (N)

"Generation Charge": The Company's charge for energy or energy and capacity to Customers receiving PLR Service. (N)

"Month": The period between two consecutive monthly meter readings taken, as nearly as practicable, on the same date of each calendar month.

"Non-Profit Senior Citizen Center Service": A separately metered establishment consisting of a facility for the use of senior citizens coming together as individuals or groups and where access to a wide range of services to senior citizens is provided. The Customer of record at this establishment must be an organization recognized by the Internal Revenue Service as non-profit and recognized by the Department of Aging as an operator of a senior citizen center.

"Nonresidential Customer': Any person, partnership, corporation, municipality, government agency, or other legal entity to whom the Company may furnish service other than residential service.

"Nonresidential Service": Any service other than residential service.

"Pennsylvania Gross Receipts Tax": References to the Pennsylvania gross receipts tax or Pennsylvania gross receipts tax rate, or provisions that incorporate the same shall include the Revenue Neutral Reconciliation enacted by the Customer Choice and Competition Act. (N)

"Provider of Last Resort (PLR) Service": The provision of energy or energy and capacity by the Company as PLR to Customers who: (1) are not eligible to obtain Competitive Energy Supply. (2) choose not to obtain Competitive Energy Supply, (3) return to PLR Service after having obtained Competitive Energy Supply, or (4) contract for Competitive Energy Supply from an EGS that fails to deliver such energy or energy and capacity. PLR Sen/ice will be provided by the Company under the appropriate Rate Schedule in this Tariff and will include a Generation Charge. (N)

"Residential Customer": Any person, partnership, corporation, municipality, government agency, or other legal entity to whom the Company may furnish residential service.

•Residential Sen/ice": Service supplied to a dwelling, including service provided to a commercial establishment if concurrent service is provided to a residential premises attached thereto. Service provided to a hotel or motel shall not be considered residential service.

(N) Indicates New Continued on Page No. 4-3

Issued Novembers, 1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 4-3

WEST PENN POWER COMPANY

RULES AND REGULATIONS (Continued)

"Revenue": Revenue or "Annual Revenue" when used with guarantee, guarantee of Revenue. Revenue guarantee or financing means the Revenue derived only from the Variable Distribution Charge or Distribution Charges that vary with billing determinants. (N)

"Service": Any regulated supply of electricity by the Company, or provision to supply electricity, or any work or material furnished, or any obligation performed by the Company under its Rules and Regulations or Rate Schedules. Regulated charges for Service are published in the Rules and Regulations and Rate Schedules of this Tariff, including Distribution, Transmission, CTC, and PLR Service charges within each Rate Schedule. Charges for Service exclude Rate Schedule Generation charges when Customer receives Competitive Energy Supply. (C)

Transition or Stranded Costs": Transition or Stranded Costs shall have the meaning as set forth in the Customer Choice and Competition Act. (N

Transmission Charge": Transmission Charge is based on the Company's Pro Forma Open Access Transmission Tariff which will change from time to time and is subject to Federal Energy Regulatory Commission (FERC) approval. The Transmission Charges are included in this tariff for the Customers' information only. (N)

"Universal Service": Policies, protections and services that help residential low-income Customers maintain electric service. The term includes Customer assistance programs, termination of service protections and policies and services that help low-income Customers to reduce or manage energy consumption in a cost-effective manner, such as the low-income usage reduction program, application of renewable resources and consumer education of defined programs. (N)

"Variable Distribution Charges": Charges to recover the balance of distribution costs, not recovered in the Fixed Distribution Charge, which are stated as variable charges and based on the billing determinants to which they are most closely associated. (N)

"Volunteer Fire Company Service": A separately metered establishment consisting of a building, sirens, a garage for housing vehicular fire fighting equipment, or a facility certified by the Pennsylvania Emergency Management Agency (PEMA) for fire fighter training. The use of electric service at this establishment shall be to support the activities of the volunteer fire company. Any fund raising activities at this establishment must be used solely to support volunteer fire fighting operations. The Customer of record at this establishment must be a predominantly volunteer fire company recognized by the local municipality or PEMA as a provider of fire fighting services.

(C) Indicates Change (N) Indicates New

Continued on Page No. 4-4

Issued November 3,1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. A-A

WEST PENN POWER COMPANY

RULES AND REGULATIONS (Continued)

SERVICE AVAILABILITY

1. Character of Electric Service

Depending upon the size, character, and geographic location of the Customer's load, the Company will supply 60-cycle alternating current at single-phase or three-phase and at the following voltages:

RULES AND REGULATIONS—Contln ued

Phase Wires Voltage

1 2 120 1 3 120/208 1 3 120/240 3 4 120/208 3 4 120/240 3 4 277/480 3 3 480 3 3 2,400 3 4 4,160 3 3 7.200 3 4 12,470 3 3 25,000 3 3 34,500 3 3 46,000 3 3 69,000 3 3 138,000

Inasmuch as some of the above voltages are available only in certain sections of the territory served by the Company, it is necessary that the Customer consult the Company about the type of service that will be supplied before proceeding with the installation of wiring or the purchase of equipment.

2. Type of Distribution

The Company's standard method of distribution is from overhead lines and all rates are based on this type of distribution.

CUSTOMER'S INSTALLATION

3. Safety

It is necessary for the protection of the Customers that all wiring and equipment be installed and maintained by a capable electrician in a safe manner. Compliance with the requirements of the National Electric Code shall be considered sufficient evidence of safe electrical installation. All wiring and equipment shaft be inspected and approved by a duly qualified inspector before service is supplied.

Continued on Page No. 4-5

Issued November 3, 1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 4-5 WEST PENN POWER COMPANY

RULES AND REGULATIONS (Continued)

4. Liability

The Customer, by accepting service from the Company, assumes full responsibility for the safety and adequacy of the wiring and equipment installed by the Customer. The Customer agrees to indemnify and save the Company harmless from any liability which may arise as the result of the use of service supplied to the Customer by the Company if such liability is caused, in whole or in part, by negligence of the Customer and not by the negligence of the Company.

The Company does not guarantee but will endeavor to furnish a continuous supply of electric energy and to maintain voltage and frequency within reasonable limits. The Company shall not be liable for damages or losses which the Customer may sustain caused by or resulting from interruptions in service, variations in service characteristics (including but not limited to high or low voltage, operation of protection or control devices, the single phasing of three-phase service, and phase reversals) or neutral to ground voltage, except such damages and losses which are solely caused by or due to the negligence or willful and wanton misconduct of the Company. Any of the aforementioned conditions occurring as a result of conditions or occurrences beyond the Company's reasonable control or as a result of electric system design common to the electric utility industry or electric system operation practices or conditions common to the electric utility industry shall be conclusively deemed not to result from the negligence or willful and wanton misconduct of the Company.

5. Use of Equipment

The Customer shall not operate any equipment creating a condition which prevents the Company from supplying satisfactory service to him or to other Customers. The Company, therefore, reserves the right to establish standards on the type and use of alt the Customer's electrical equipment connected to the Company's lines, especially to prohibit loads of highly fluctuating nature or low power-factor characteristics and to prevent the use of any equipment which causes radio or television interference.

6. Capacity

The Company's existing facilities have a limited capacity; therefore, to assure satisfactory operation of the Customer's facilities and to protect both the Customer's and the Company's facilities against damage, the Company must be advised of any substantial increase in the Customer's installation so that facilities of the proper capacity may be provided. The Customer shall pay for any damage or loss caused to the Company by violation of this provision.

Continued on Page No. 4-6

Issued Novembers, 1998 Effective January 1, 1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 4-6 WEST PENN POWER COMPANY

RULES AND REGULATIONS (Continued)

APPLICATION FOR RESIDENTIAL SERVICE

7R. Application

Each Residential Customer shall make oral or written application to the Company before beginning to use the Company's service.

6R. Establishing and Maintaining Credit

Credit Standards

I. New Residential Customers (Applicants) - Credit rating is satisfactory if a new Residential Customer . meets one of the following requirements:

A. Applicant has had account with Company under same name at another location (similar class of service):

1. Within period of 24 consecutive months prior to date of application; and

2. Did not fail to pay bills for Company Charges by due date or otherwise permissible time more than 3 times; and (C)

3. Service was not terminated for nonpayment of Company Charges during past 12 consecutive months at prior location. (C)

B. Applicant is primarily responsible for payment of electric service bill for Company Charges and (C)

1. Owns property or has entered into the agreement to purchase property; or

2. Rents property under lease for at least one year from date of application of service.

If Applicant meets this requirement but has violated previous requirements under A, credit rating is considered unsatisfactory.

C. Applicant provides satisfactory information on Application for Residential Electric Service to show he is not an unsatisfactory credit risk, such as:

1. Credit references

2. Name of utility company which served Applicant previously

If Residential Customer refuses to answer questions on application or gives false information, on application, credit rating is considered unsatisfactory.

(C) Indicates Change Continued on Page No. 4-7

Issued November 3.1996 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 4-7 WEST PENN POWER COMPANY

RULES AND REGULATIONS (Continued)

D. If Applicant does not establish credit under A and B, service will be supplied providing one of the following requirements is satisfied:

1. Becomes member in good standing of composite credit group.

2. ' Makes cash deposit, as outlined in Rule 8. Section III.

3. Produces written guarantee from third party guarantor.

II. The Existing Residential Customer (Ratepayers) - Existing Residential Customer's credit rating is unsatisfactory under following circumstances:

A. During past 12 months, the Residential Customer has been/is past due and requires collection activity:

1. On two consecutive bills for Company Charges; or (C)

2, Three times at different intervals.

B. The Residential Customer enters into amortization agreement and fails to comply with it.

C. The Residential Customer service has been terminated for nonpayment, fraud, meter tampering, and so forth.

III. Security Deposits - Company, at its option, collects deposits from:

A. New Residential Customer (Applicant) and Existing Residential Customers (Ratepayers) who do not meet established credit standards.

B. Seasonal Residential Customer.

C. Residential Customer as a condition to the reconnection of service.

D. Residential Customer for failure to comply with settlement or amortization agreement.

Company shaft issue a receipt for each deposit and shall pay simple interest to the depositor annually on all deposits. Interest paid shall be at the rate of the average of 1-year Treasury Bills for September, October and November of the previous year. Interest is calculated and applied annually on bill for Company Charges. (C)

IV. Returned Checks - If a check received in payment of a Customer's account is returned to the Company unpaid by the Customer's bank and cannot be redeposited by the Company for payment, a 310.00 charge for the returned check will be added to the Customer's account. Each Customer will be allowed a waiver of one returned check charge in a 12-month period.

A deposit obtained from a Residential Customer shall be refunded/applied with accrued interest for the following reasons:

A. Residential Customer has paid bill for Company Charges for 12 consecutive months and has not been terminated during that time and has not paid bill for Company Charges past permissible lime on more than 2 occasions. (C)

(C) Indicates Change Continued on Page No. 4-8

Issued November 3,1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 4-6

WEST PENN POWER COMPANY

RULES AND REGULATIONS (Continued)

B. Residential Customer requests disconnection of service. Deposit and accrued interest are applied to the final bill for Company Charges and balance, if any is refunded to the Customer.

C. Residential Customer has done one of the following:

1. Fulfilled credit requirements as outlined in credit standards. 2. Provided third-party guarantor. 3. Became member in composite credit group.

D. Company, at its option, reviews Residential Customer's payment of Company Charges before end of 12-month period necessary to establish credit and refunds all or part of security deposit.

E. If Residential Customer's account is past due, Company applies security deposit with accmed interest to avoid termination of service. If deposit is applied to prevent termination, Company has right to request security deposit to be restored to original amount.

APPLICATION FOR NONRESIDENTIAL SERVICE

(C)

(C)

7N. Application

Each Nonresidential Customer shall make oral or written application to the Company before beginning to use the Company's service.

8N. Establishing and Maintaining Credit

(a) If the credit standing of a present or prospective Nonresidential Customer is not satisfactory to the Company, the Nonresidential Customer shall leave, or cause to be left, a deposit with the Company to secure payment of all bills for Company Charges. The amount of such deposit shall be the Compan/s estimate of the amount of the bills for Company Charges to be supplied by Company in any two consecutive months with a minimum of $50.00. (C)

(b) The Company shall issue a receipt for each deposit, and shall pay to the depositor, annually, simple interest at the rate of 6% per year. A Nonresidential Customer may not transfer his deposit to secure another Customer's account.

(c) If the total of the Nonresidential Customer's bill for Company Charges in any two consecutive months exceeds the amount of the deposit, the Company may require that the deposit be proportionately increased. (C)

(d) A bill for Company Charges which is not in dispute must be paid before a termination notice is released, which will occur no sooner than four days after the imposition of the late payment charge, in order to preserve the Nonresidential Customer's credit standing. (C)

If a bill for Company Charges is disputed and payment is withheld on or beyond the date the late payment charge is imposed, and settlement is made in the Nonresidential Customer's favor, it must be paid within 10 days after settlement in order to preserve the Nonresidential Customer's credit. A disputed bill for Company Charges settled in the Company's favor shall be considered "undisputed" for the purpose of this rule. (C)

(C) Indicates Change Continued on Page No. 4-9

Issued November 3,1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 4-9 WEST PENN POWER COMPANY

RULES AND REGULATIONS (Continued)

(e) The Company may apply a deposit to any past-due account for electric service supplied to the Nonresidential Customer.

(f) If service has been discontinued because of the failure of a Nonresidential Customer to pay a bill for Company Charges, service will not be reestablished for that Customer until the amount owed has been paid in full and a security deposit paid. (C)

(g) Interest calculated from January 1 will be refunded to Customer, along with Customer's security deposit, at the end of twelve months if all monthly bills for Company Charges have been paid by the due date and if a credit review of Customer's business indicated financial stability. (C)

In the event of disconnection, other than seasonal, the deposit, plus accrued interest to the date of disconnection, will be applied to Customer's final bill for Company Charges and the balance, if any, will be refunded to Customer. (C)

(h) Returned Checks - If a check received in payment of a Customer's account is returned to the Company unpaid by the Customer's bank and cannot be redeposited by the Company for payment, a $10.00 charge for the returned check will be added to the Customer's account. Each Customer will be allowed a waiver of one returned check charge in a 12 month period.

SELECTION OF RATE SCHEDULE FOR CUSTOMER

9. Selection of Rate Schedule

If more than one Rate Schedule is available for any service, the Company will assist the Customer initially in selecting the Schedule which, on the basis of the Customer's advice to the Company regarding the anticipated service conditions, is most advantageous. If, as a result of a permanent change in the Customer's service conditions, another Rate Schedule becomes more advantageous to the Customer, the Company will, after written notice of such change, recommend such other Rate Schedule.

COMPANY'S FACILITIES ON CUSTOMER'S PREMISES

10. Right-of-Way

On premises controlled by the Customer, the Customer shall provide the Company, free of cost, suitable location and housing for Company's facilities necessary for supplying sen/ice to the Customer as well as satisfactory right-of-way.

11. Access to Customer's Premises

The Customer shall provide the Company's employees free access to the Customer's premises, at ali reasonable hours, for purposes necessary or proper in connection with supplying service. The Company's authorized agents who seek to enter upon the Customer's premises shall be identified by proper credentials furnished by the Company for such purposes.

12. Maintenance and Removal

Facilities provided by the Company are the property of the Company and shall remain its property. The Customer shall permit the Company to inspect, maintain, and remove the Company's facilities, at all reasonable hours. (C) Indicates Change

Continued on Page No. 4-10

Issued November 3,1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 4-10

WEST PENN POWER COMPANY

RULES AND REGULATIONS (Continued)

13. Damage and Loss

The Customer shall be held responsible for damage to and loss of the Company's property located on the Customer's premises when such loss or damage is due, in whole or in part, to any act of negligence or willful wrong on the part of the Customer.

14. Connection

(a) The Company will install, at its own expense, the necessary overhead connection from its pole to the Customer's facilities. The connection with the Customer's facilities shalf be made at a point nearest to the lines of the Company consistent with safety considerations. All service supplied by the Company is sold and delivered at the point where the Company's facilities are connected to the Customer's facilities.

(b) Whenever a Customer requests the Company to supply service to an establishment in a manner which requires equipment and facilities in addition to those which the Company would normally provide, the Customer shall pay the Company the cost differential between the cost of providing such service and the cost of providing standard overhead sen/ice.

(c) Whenever a Customer requests the Company to supply service to an establishment in a manner which requires equipment and facilities in addition to those which the Company would normally provide, the Company may elect to provide the additional equipment and facilities for a monthly facility charge equal to 2.1% of the additional cost. This facility charge will be in addition to and independent of any other provisions of the Rules and Regulations or Rate Schedules.

(d) The Company shall not be required to install more than one meter at an establishment, except as may be required by public safety regulations or as provided in the Rate Schedules. The Company may install more than one meter where required by service conditions.

15. Tampering

Interference with or tampering with the Company's meters, wire, or other facilities, or any act preventing the proper registration of service is prohibited, and the Customer shall pay for all Joss or damage caused by his violation of this rule. The Company may discontinue the supply of service in case of such violation, and it may refuse to reconnect service until the Customer has corrected the improper condition and has complied with the usual requirements of the Company to prevent further violation. Furthermore, if incorrect metering is caused by such violation, the Customer shall pay an amount estimated by the Company to cover service not property metered.

RELOCATION OF FACILITIES

16. Customer's Facilities

The Customer shall pay the cost of relocating his facilities if such relocation is made necessary by a moving of the Company's facilities as required by law or by public improvements.

Continued on Page No. 4-11

Issued Novembers, 1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 4-11

WEST PENN POWER COMPANY

RULES AND REGULATIONS (Continued)

17. Company's Facilities

(a) The Customer shall pay the cost of moving the Company's facilities if they are moved at the Customer's request.

(b) When the Company's facilities have to be moved or have been moved in order to end a condition hazardous to life, limb, property or continuity of service which condition was caused by another person or entity, then the costs for moving the facilities shall be paid by that person or entity.

(c) When a residential property owner requests a distribution line pole, with its associated attachments, be removed or relocated, the charges to be billed to that residential property owner shall be based upon the below defined contractor costs, direct labor and direct material costs actually associated with the work or construction involved. This subsection shall not include pole repairs or replacements necessitated by the intentional or negligent conduct of the party.

1. Contractor costs - Amount paid by the Company to a contractor for work performed on a pole removal or relocation. (C)

2. Direct labor costs - Includes pay and expenses of Company employees directly attributable to work performed on pole removals or relocations. Excludes payroll taxes, workmen's compensation, similar items of expense and construction overhead costs. (C)

3. Direct materials costs - Includes the purchase price of materials used in performing a pole removal or relocation and excludes the related stores expenses. Proper allowance shall be made for unused materials, and materials recovered from temporary structures, and for discounts allowed and realized in purchase of materials.

SUPPLY OF SERVICE

18. Continuity of Service

The Company will use reasonable diligence in attempting to provide continuous service. The Company shall not be liable for any loss, cost, damage, or expense to any Customer caused by any failure to supply electricity according to the terms of a contract, or by any interruption of the supply of electricity, reversal of the service, variation in voltage or by any other failure, when such failures are due to acts of God, public enemies, accidents, strikes, riots, wars, extraordinary repairs, operating necessities, ordere of Court or other Governmental authority, or to any other acts or conditions reasonably beyond the control of the Company.

In the event of an emergency threatening the integrity of its system, the Company may without liability interrupt, curtail, or suspend service to any or all of its Customers.

Additional Limitations on Liability in Connection with Direct Access. Other than its duty to deliver electric energy and capacity, the Company shall have no duty or liability to a Customer receiving Competitive Energy Supply arising out of or related to a contract or other relationship between such a Customer and an EGS. (N)

The Company shall implement Customer selection of an EGS consistent with applicable rules of the Commission and shall have no liability to a Customer receiving Competitive Energy Supply arising out of or related to switching EGSs, unless the Company is negligent in switching or failing to switch a Customer. (N)

(C) Indicates Change (N) Indicates New

Continued on Page No. 4-12

Issued November 3, 1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 4-12 WEST PENN POWER COMPANY

RULES AND REGULATIONS (Continued)

The Company shall have no duty or liability with respect to electrical energy before it is delivered by an EGS to a point of delivery on the Company's electric distribution system. After its receipt of electric energy and capacity at the point of delivery, the Company shall have the same duty and liability for distribution service to Customers receiving Competitive Energy Supply as to those receiving electric energy and capacity from the Company.

In all other circumstances, the liability of the Company to customers or other persons for damages, direct or consequential, including damage to computers and other electronic equipment and appliances, loss of business, or loss of production caused by any interruption, reversal, spike, surge or variation in supply or voltage, transient voltage, or any other failure in the supply of electricity shall in no event, exceed an amount in liquidated damages equivalent to the greater of $500 or two times the charge to the customer for the service affected during the period in which such interruption, reversal, spike, surge or variation in supply or voltage, transient voltage, or any other failure in the supply of electricity occurs. In addition no charge will be made to the customer for the affected service during the period in which such interruption, reversal, spike, surge or variation in supply or voltage, transient voltage, or any other failure in the supply of electricity occurs. A variety of protective devices and alternate power supplies that may prevent or limit such damage are available for purchase by the customer from third parties.

19. Metering

a. The Company shall provide all meters and metering equipment necessary to obtain the information required to bill its Customers. The Company may select and use any type of meters and metering equipment, provided It meets the accuracy requirements of the Public Utility Commission, except as provided in paragraph c. below.

b. At the Company's sole discretion, the kilowatt-hours and billing demands required for billing purposes may be determined by computations or by measurement in the case of installations having a fixed load or demand value controlled to operate for a definite number of hours in a billing period.

c. A Customer or EGS, on behalf of a Customer, may request the installation of Advanced Metering for use as a biliing meter and have billing services performed pursuant to the rules adopted by the Commission. The Company will offer, provide and support a selection of Advanced Meters. Installation of the meters will be accomplished within 20 business days after receipt of an application. The Customer or the Customer's EGS must pay for new or additional special metering or Advanced Metering equipment based upon the net incremental cost of purchasing, installing, maintaining and reading the meters. The method of payment for the Advanced Meter will be chosen by the Customer and/or the EGS. The net incremental cost for the advanced meter may be paid to the Company by the Customer or the EGS alone, or jointly by the Customer and the EGS pursuant to a mutual agreement. Payment by a Customer will be in the form of a surcharge on the Customer's monthly bill. The Company or its agent will own, install, and maintain all meters and metering equipment, including meter related devices and networks installed in conjunction with the metering. The Company will read Advanced Meters for purposes of billing the Customer and the EGS for all services provided under this Tariff and the EGS Tariff. The EGS may remotely read the Advanced Meter for purposes of monitoring the Customer's load or billing the Customer for generation services.

(N)

(N)

(C)

(C) Indicates Change (N) Indicates New

Continued on Page No. 4-13

Issued November 3,1998 Effective January 1,1999

Supplement No. 140 to Bectric-Pa. P. U. C. No. 39

Original Page No. 4-13

WEST PENN POWER COMPANY

RULES AND REGULATIONS (Continued)

This page intentionally left blank.

Continued on Page No. 4-14

Issued Novembers, 1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 4-14

WEST PENN POWER COMPANY

RULES AND REGULATIONS (Continued)

CUSTOMER'S USE OF SERVICE

20R. Restrictions on Use of Residential Service

Residential service to each dwelling unit used for permanent occupancy at a fixed location shall be separately metered.

Such service shall not be resold, submetered, or charged to another party by the Customer unless provided for in the Company's Rate Schedules.

This rule does not apply to service used prior to August 30,1979.

20N. Restrictions on Use of Non-Residential Service

Service will be furnished for use only by Customer and only within premises described in the electric service agreement.

Upon application and affidavit and proof presented to the company and satisfactory to the Commission, any owner or his representative of a new multi-tenancy commercial or office building may seek an exemption to tariff Rule 20N by demonstrating that the installation of individual electric meters at each separate unit within the building will not achieve a significant reduction in consumption of electricity by the tenants of the building. New and existing nursing homes with life care (medical) facilities and common provision for dining, laundry, and similar services will be considered to have met the above requirement upon filing the above affidavit and may then be prospectively classified non-residential in their entirety.

Such service shall not be resold, submetered, or charged to another party by the Customer unless provided for in the Company's Rate Schedules.

This rule does not apply to service used prior to September 25.1981.

21. Auxiliary Power Sources and Readiness to Serve

Service to a Customer, any part of whose electric requirements are provided by other than Company-owned facilities, and where the Company supply can be substituted for that of the Customer, will be supplied only under the provisions of this rule.

The maximum demand in kilowatt and power factor which the Company is obligated to supply shall be determined by agreement between Customer and Company.

In case the maximum demand in kilovolt-amperes which the Company is obligated to supply is less than the Customer's maximum demand as estimated by the Company, the Company may require the Customer to limit his demand to the load which the Company is obligated to supply by means of a load limiter to be furnished, installed, and maintained by the Customer, approved, set, and sealed by the Company.

The Customer shall not at any instant operate any source of supply in parallel with the Company's sen/ice without written permission from the Company.

Monthly billing will be under the provisions of the rates in conjunction with which this rule is employed.

Continued on Page No. 4-15

Issued November 3,1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 4-15

WEST PENN POWER COMPANY

RULES AND REGULATIONS—Continued

The Customer shall reimburse the Company for all loss or damage sustained by the Company as a result of the Customer's use of the Company's service under the provisions of this rule.

PAYMENT FOR SERVICE

22. Billing

(a) Bills for regular service will be rendered at regular intervals of one or two months. For Residential Customers, bills for regular sen/ice will be rendered on a billing month basis in accordance with Chapter 56. When meters are read at intervals of more than one month, bills for the initial months of the interval may be estimated either from a like period of similar use or in some other reasonable way. The bill for the final month of the interval will be calculated from the metered use during the interval corrected for the amount of estimated use previously billed.

Upon request the Company will supply any Customer with a card form upon which he may record his meter readings at the end of each initial month of a meter reading interval longer than one month. If such card is received by the Company within two days after the close of such month, the bill for such month will be computed from the meter reading shown on the card instead of by estimate. The Company will adjust estimates of bills for changes in conditions of which it has been notified in advance by a Customer.

Seasonal accounts such as hunting and fishing camps shall be read a minimum of twice a year.

(b) Residential Customers who request disconnection of seasonally used service will be charged a fee of $30.00 for reconnection.

(c) Bills for special service or service for short periods only, including charges for connection and disconnection, may be rendered by the Company at any time.

(d) If service is supplied to the Customer before a meter is placed in use or while the metering is defective or if the meter is not read, the Customer shall pay for service on a basis estimated either from a like period of similar use or in some other reasonable way.

(e) Upon failure to make application for the Company's service, the Customer shall be liable for all service supplied since the last meter reading unless satisfactory proof is supplied to Company as to when Customer took service.

(f) Sen/ice supplied to each meter shall be billed separately unless otherwise provided for in the Rate Schedules. Customers receiving Competitive Energy Supply from an EGS may aggregate multiple sites or meters for the purpose of energy scheduling and billing of generation charges only if the EGS performs the billing of the Competitive Enerpy Supply. (N)

(g) Customers with 10 or more separate accounts may request "Summary Billing" of the accounts. Applicability of Summary Billing to accounts is at the sole discretion of Company and may require a deposit or other financial arrangement acceptable to Company to compensate Company for any delays in receipt of revenue for cycle billed accounts.

(N) Indicates New Continued on Page No. 4-16

Issued Novembers, 1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 4-16

WEST PENN POWER COMPANY

RULES AND REGULATIONS (Continued)

(h) Billing Errors. When the Company provides billing for Competitive Energy Supply on behalf of an EGS Company shall not be responsible for biliing errors resulting from incorrect price infonnation received from an EGS." W

(i) Billing Options. The Company will always bill the Customer for the Company's fixed and variable distribution service charges. CTC, transmission charges and energy and capacity charges (when the Company is providing PLR Service). A Customer may request: (1) that its EGS provide a separate bill only for the Competitive Energy Supply; or (2) require its EGS to appoint the Company as the EGS" billing agent. When Company provides billing for the EGS, the Company will bill the Customer not only for the Company's fixed and variable distribution service charges, transmission charges and CTC, but also for the Competitive Energy Supply. (N)

(j) Residential and small business Customers are entitled to receive at no charge and a least once a year, historical billing data from whomever reads the meter for billing purposes. The Company will provide this information to Customers qualified to receive it upon request. (N)

23. Payment of Bills

(a) Late payment charges will be applied as provided in Rate Schedules under which service is supplied if all previous bills have not been paid. If bills are paid by mail, the date of the postmark will be considered the date of payment. The period will not be extended because of the Customer's failure to receive a bill unless said failure is due to an act of the Company.

(b) The payment period shall be 30 days for bills rendered to The Commonwealth of Pennsylvania or any department or any institution thereof, and The United States of America or any department or any institution thereof.

(c) At the option of a Residential Customer receiving service under Rate Schedule 10. Residential Customer may request billing based upon one-twelfth of the Residential Customer's Company charges for the latest twelve months actual usage. Any difference between the average payments and the actual Company charges for the twelve-month average payment period will be amortized over the next twelve-month period. A late payment charge of 1.25% per month will be added to average payment bill not paid by the due date. (C)

(d) When the due date for residential service occurs from the 21st day of the month through the fifth day of the following month, the due date may be extended upon request to the sixth day of that month for Customers receiving Social Security or Federal Government Pension benefits on or about the first of the month.

(e) A "Budget Billing Plus Plan" is available to Residential Customers in arrears for payment of service. Bills will be rendered as described in (c) above with an amortization of the arrearage based on ability to pay. A fate payment charge of 1.25% per month will be added to a budget billing plus bill not paid by the due date.

(0 Late payment charges will be frozen upon receipt of notice that Customer is eligible for LIHEAP funds and these late payment charges will not be increased for the remainder of the LIHEAP program year.

24. Billing Adjustments

(a) In case of overpayment or underpayment of any Company Charges, there shall be a proper and prompt adjustment between the Company and the Customer. (C)

(C) Indicates Change (N) Indicates New

Continued on Page No. 4-17

Issued Novembers, 1998 Effective January 1,1999

WEST PENN POWER COMPANY

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 4-17

RULES AND REGULATIONS (Continued)

(b) If the Company is prevented from supplying or if the Customer is prevented from receiving any considerable portion of the service required, and If such failure to supply or receive be due to unusual circumstances beyond the control of either the Company or the Customer such as acts of God, public enemies, war, or orders of Court, then a prompt billing adjustment in the Customer's favor shall be made upon written request.

TERMINATION, INTERRUPTION, AND DISCONTINUANCE OF RESIDENTIAL SERVICE

DISCONTINUANCE OF SERVICE BY RESIDENTIAL CUSTOMER

25R. Notice of Discontinuance

Company will discontinue service without prior written notice when Residential Customer requests discontinuance at his residence provided that the Residential Customer and members of household are only occupants.

Company will discontinue service at dwelling other than Residential Customer's residence when the Residential Customer states in writing that the premises is unoccupied and that such information may be relied upon by the Pennsylvania Public Utility Commission in administering System of Uniform Service Standards for Public Utilities and that false statements are punishable criminally, or occupant(s) affected by the proposed discontinuance inform the Company orally or in writing of their consent.

Company will not terminate service to single multi-unit dwelling or any premises which is not the Residential Customer's residence unless, in addition to provisions of Rule 27:

(a) At least 10 days prior to proposed termination, Company conspicuously posts required notice stating conditions to avoid termination; and

(b) Company mails copy of notice to any of following agencies:

1. Department of Licenses and Inspections 2. Department of Public Safety 3. City or County Public Health Department

4. Grantees of Emergency Energy Funds from Community Service Agency.

Third Party Notification

Each new and existing Residential Customer is encouraged to designate a consenting individual or agency to receive a copy of Service Termination Notice in which Company shall advise third party of pending action and efforts which must be taken to avoid termination. Company will also periodically solicit community groups and police to accept third party notices in order to prevent, unnecessary terminations and to protect public health and safety.

26R. Transfer of Agreements

Agreements between Residential Customers and the Company are transferable only with the Company's written consent.

(C)

(C) Indicates Change Continued on Page No. 4-18

Issued Novembers, 1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 4-18 WEST PENN POWER COMPANY

RULES AND REGULATIONS (Continued)

27R. Company's Right to Terminate Residential Service

I. Conditions for Which Termination of Service is Authorized

A. Nonpayment of undisputed, past-due Company charges for service, CTC and energy and capacity. (C)

B. Failure to comply with one of the following:

1. Pay security deposit 2. Provide third-party guarantor 3. Establish credit in accordance with Company's credit standards.

C. Refusing without reason to give Company personnel access to meters, service connections, and other Company property for purpose of maintenance, repair, or meter reading.

D. Unauthorized interference or diversion of electric service.

E. Failure to comply with amortization or settlement agreement.

F. Fraud or material misrepresentation of identity for purpose of obtaining electric service.

G. Tampering with meters and/or other Company equipment.

H. Violating any tariff provisions on file with Pennsylvania Public Utility Commission which endangers the:

1. Safety of any person.

2. Integrity of Company's energy delivery system.

II. Condition for which Termination of Residential Service is not authorized.

A. Nonpayment for concurrent service of the same class received at a separate metering point. B. Nonpayment for a different class of service received at same or different location; however,

service may be terminated when a change in classification is necessitated upon the completion of construction work previously billed at a different rate applicable during construction.

C. Nonpayment for nonrecurring charges for services that are nonessential to delivery or metering of services.

D. Nonpayment of past-due bills of previous Residential Customer at same address.

(C) Indicates Change Continued on Page No. 4-19

Issued November 3,1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 4-19

WEST PENN POWER COMPANY

RULES AND REGULATIONS (Continued)

Nonpayment of or failure to restore security deposit applied to past-due account involving "makeup" bill.

"Makeup" bill is bill for previously unbilled consumption which exceeds Customer's normal bill by 50% and results from:

1. Company billing error; or 2. Stopped, broken, or inaccurate meter; or 3. Two or more consecutively estimated bills.

F. Failure to comply with amortization agreement prior to due date of bill which forms basis for agreement.

G. Nonpayment of final bill more than two years after final bill date.

H. Nonpayment for Residential Service furnished in another person's name other than Residential Customer unless it is legally proven that the Residential Customer is responsible for service furnished previously.

I. Nonpayment of estimated billings unless estimation was required because Company personnel did not have access to meter on two occasions and reasonable effort was made to schedule reading at time convenient for Residential Customer or Occupant.

J. Nonpayment of past-due accounts which:

1. Accrued over two or more billing periods; and 2. Remain unpaid in whole or in part for six months or less; and 3. Total less than $25.

K.

L.

In cases where Occupant of dwelling is ill or affected with medical condition which will be aggravated if service is tenninated and Company is in receipt of Medical Emergency Certificate provided by physician. Company may petition Pennsylvania Public Utility Commission for waiver if medical certificate is invalid and/or Customer fails to arrange to make payments on bill.

Bills in dispute when Customer has contacted Company and/or Pennsylvania Public Utility Commission prior to actual termination of service.

M. Nonpayment of EGS charges.

Termination of Service Without Prior Notice

A. Safety of any person is endangered. B. Integrity of Company's eneigy delivery system is endangered.

(N)

(N) Indicates New Continued on Page No. 4-20

Issued Novembers, 1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 4-20

WEST PENN POWER COMPANY

RULES AND REGULATIONS (Continued)

IV. Termination of Service After Prior Notice

Company will terminate service as authorized under Rule 27R-I. after personally contacting ratepayer or responsible adult occupant at least 3 days prior to actual termination. Personal contact shall mean contacting:

A. Ratepayer, in person or by telephone: or

B. Person designated by ratepayer to receive copy of Termination Notice, in person or by telephone; or

C. Community interest group or other entity which has previously agreed to accept copy of Termination Notice and contact ratepayer, in person or by telephone; or

D. Pennsylvania Public Utility Commission, in writing.

If personal contact cannot be made at time of proposed termination, Company will conspicuously post Termination Notice at residence and affected premises advising service will be discontinued not less than 48 hours from time and date of posting.

After required notice and prior actual termination, ratepayer or occupant may contact Company and Company will fully explain:

A. Reasons for proposed termination.

B. Methods for avoiding termination by:

1. Making payment in full or otherwise eliminate grounds for termination. 2. Entering into settlement or amortization agreement.

C. Right to file dispute with Company and thereafter, informal complaint with Pennsylvania Public Utility Commission.

D. Procedures for resolving disputes and informal complaints.

E. Residential Customer's duty to pay any portion of Company charges for transmission, distribution, CTC and energy and capacity not in dispute. (C)

F. Medical emergency procedures.

At time of actual disconnection. Company will conspicuously post or deliver to responsible person at Residential Customer's residence and affected premises a notice or written statement containing address and telephone number of Company office where Residential Customer or Occupant may arrange to have service restored as well as "Medical Emergency Notice."

V. Days Termination is Prohibited

Termination is prohibited on Pennsylvania Public Utility Commission and bank holidays; day before those holidays, and Fridays, Saturdays, and Sundays.

(C) Indicates Change Continued on Page No. 4-21

Issued November 3,1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 4-21 WEST PENN POWER COMPANY

RULES AND REGULATIONS (Continued)

VI. Restoration of Residential Service

Company will reconnect service by end of first full working day after receiving:

A. Full payment plus reconnection fee prescribed in Rule 27R VII.

B. Payment of amounts currently due for Company charges according to settlement or amortization agreement plus prescribed reconnection fee.

C. Adequate assurance that any unauthorized use or practice will cease, plus full payment of reconnection fee.

D. Compliance or adequate assurance of compliance with any applicable provisions for establishing credit, posting of deposits, or guarantees.

VII. Reconnection Charge

When electric service has been disconnected by the Company for nonpayment, fraud, theft of service, etc., of any Residential Customer, the Residential Customer will be required to pay all outstanding Company charges in full or amounts due under a settlement or amortization agreement plus a reconnection charge as specified below before service is reconnected. Reconnection charge for a residence may be part of a settlement or amortization agreement.

When service to a dwelling has been tenninated, the Company shall reconnect service by the end of the first full working day following the day on which arrangement for reconnection is made.

The reconnection charges will be:

A. $30.00 for reconnection made during regular working hours.

B. $45.00 for reconnection made after regular working hours.

C. $90.00 for reconnection made on Saturday, Sunday or Company observed holiday.

Interruption of Service

Company may temporarily interrupt service where necessary to make repairs or maintenance, eliminate an imminent threat to life, health, safety, or substantial property damage, or for reason of local, state, or national emergency.

I. Interruption with Prior Notice

When Company knows in advance of circumstances requiring interruption, prior notice of cause and expected duration will be given those affected.

(C)

(C)

(C)

(C) Indicates Change Continued on Page No. 4-22

Issued November 3,1996 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 4-22

WEST PENN POWER COMPANY

RULES AND REGULATIONS (Continued)

II. Interruption without Prior Notice

Where service must be interrupted due to unforeseen circumstances, Company will notify those affected as soon as practical, as to cause and expected duration. Notice will be by personal contact, phone contact, and/or mass media.

Service will be intenupted for only such periods of time necessary to protect health and safety of public, to protect property, or to remedy situation which necessitated interruption. Service will be resumed as soon as possible.

DISCONTINUANCE OF SERVICE BY NONRESIDENTIAL CUSTOMER

25N. Notice of Discontinuance

Upon the Nonresidential Customer's discontinuance of sen/ice, the Nonresidential Customer shall remain liable for any sen/ice supplied to the premises until the Company receives notice of discontinuance; and in all cases, the Nonresidential Customer shall remain responsible for all obligations under his Agreement.

26N. Transfer of Agreements

Agreements between Nonresidential Customers and the Company are transferable only with the Company's written consent.

DISCONNECTION OF NONRESIDENTIAL SERVICE BY COMPANY

27N. Company's Right to Disconnect Nonresidential Service

(a) Disconnection Without Notice

The Company reserves the right to disconnect the supply of Nonresidential Service for any of the following reasons, without notice:

(1) Emergency repairs, alternations, or operating necessities; (2) Shortages or interruptions in the Company's supply of service or other emergencies; (3) Defects or hazardous conditions of the Nonresidential Customer's equipment or its detrimental

effect on the service to other Customers; (4) Fraud or abuse by the Nonresidential Customer (5) Orders of Governmental authority.

(b) Cancellation of Agreement and Disconnection of Nonresidential Service Without Notice

The Company reserves the right to cancel an Agreement and disconnect the supply of Nonresidential Service for any of the following reasons without notice:

(1) If a writ of execution is issued against the Nonresidential Customer out of any Court of competent jurisdiction whether or not levy or execution is made thereunder;

(2) if the Nonresidential Customer makes a fraudulent or unauthorized assignment or commits any other act of bankruptcy or if a receiver is appointed for the Customer;

Continued on Page No. 4-23

Issued November 3, 1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 4-23 WEST PENN POWER COMPANY

RULES AND REGULATIONS (Continued)

(3) If a landlord's warrant is issued against the Nonresidential Customer or the Nonresidential Customer's premises;

(4) If the Nonresidential Customer's premises are dosed under order of Court;

(5) If the Nonresidential Customer's assets are otherwise seized, set aside, impounded, or made unavailable for payment of the Compan/s charges. (C)

In case of cancellation of Agreement by the Company, all Company charges for Nonresidential Service previously supplied and all other obligations shall be immediately due and payable. (C)

(c) Disconnection of Nonresidential Service

The Company reserves the right to disconnect the supply of Nonresidential Service for any of the following reasons after reasonable notice:

(1) Repairs, alterations, shortages, or extension of Company facilities;

(2) Failure to pay any Company charges for nonresidential service within four days after the imposition of the Late Payment charge; (C)

(3) Violation of these Rules and Regulations or of any Agreement or noncompliance with any of the provisions of the effective Rate Schedule.

(d) Reconnection Charge for Nonresidential Service

When electric service has been disconnected by the Company for nonpayment of Company charges, fraud, theft of service, etc., of any Nonresidential Customer, the Nonresidential Customer will be required to pay all outstanding Company charges in full or amounts due under a settlement or amortization agreement plus a reconnection charge as specified below before service is reconnected. (C)

When sen/ice has been terminated, the Company shall reconnect service by the end of the first full working day following the day on which arrangement for reconnection is made.

The reconnection charges for single meter connection up to SO kilowatts and 277 volts wilt be:

(1) $30.00 for reconnection made during regular working hours.

(2) $45.00 for reconnection made after.regular working hours.

(3) $90.00 for reconnection made on Saturday, Sunday or company observed holiday.

The reconnection charge for multi-meter connections and connections in excess of 50 kilowatts and 277 volts will be based upon time and material cost but not less than the above charges.

(C) Indicates Change Continued on Page No. 4-24

Issued Novembers, 1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 4-24

WEST PENN POWER COMPANY

RULES AND REGULATIONS (Continued)

EXTENSION OF THE COMPANY'S FACILITIES

28. Single Phase Line Extension Plan CC)

(a) Availability

Single Phase Line Extension Plan (Plan SP) governs extension of all single phase electric service except when extension is from distribution lines over 15,000 volts.

(b) Purpose

Plan SP is designated to protect Company's investment and prevent rate discrimination against Customers who receive no benefit from line extension.

(c) Chargeable Costs

For purpose of Plan SP. Chargeable Costs are based upon contractor costs, direct labor and direct material costs associated with line extension as defined in Rule 17 (c).

(d) Basic Extension Distance (BED)

Line extension provided without financing or guarantee plans not exceeding 1,000 feet; with not more than 400 feet on private property unless there is documented potential for additional Customers.

(e) Rate for Electricity

Customer is billed for electricity on applicable rate schedule, independent of any payment required by Plan SP.

(f) Term

Customers take service under this extension plan for a term of five years for guarantee of revenue.

(g) Conditions

(1) The company shall not be required to start construction on any extension under Plan SP until:

a. Application for sen/ice has been signed by the Customer and accepted by the company.

b. The Customer has made any advance payment required by this extension plan.

c. Necessary rights-of-way have been obtained.

d. The Customer agrees to pay any costs relating to the acquisition of necessary rights-of-way or any costs caused by a longer extension to avoid such right-of-way costs.

e. The Customer's wiring has been completed and the company has been given assurance of safe installation by a certificate of electrical approval issued by a recognized inspection agency.

(C) Indicates Change

Continued on Page No. 4-25

Issued Novembers, 1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 4-25

WEST PENN POWER COMPANY

RULES AND REGULATIONS (Continued)

(h) Guarantee of Revenue for Five Years (Monthly Minimum)

Revenue guarantee is required when Customer's estimated annual revenue does not wanant unsecured line extension. If chargeable costs for line extension in excess of basic extension distance exceeds 10 times estimated annual revenue, revenue guarantee is required.

(i) Total Cost Contribution Plan (C)

In lieu of financing or guarantee plans described herein, Customer is permitted to make outright nonrefundable advance contribution in amount of total cost of construction for facilities in excess of BED. Customer is billed in accordance with applicable rate schedule plus monthly maintenance charge for facilities in excess of BED.

(j) Chargeable Cost Advance (C)

When line extension exceeds BED, Customer advances to Company amount equaling estimated chargeable cost for portion of line exceeding BED.

When more than one Customer is to be served from such a line extension, the chargeable cost shall be divided equally among them for that portion of the tine which is shared and Customer will pay the full amount for any portion not shared.

(k) Requirements for Service to Nonpermanent Customer

If the Customer to be served is not permanent in nature, the Customer shall also advance the prorated chargeable cost of installation and removal (out-of-pocket cost) of the BED for the line extension together with the chargeable cost installation and removal costs (out-of-pocket costs) of transformers, service drops, and meters.

29. Polyphase Line Extension Plan and Single Phase Line Extensions Not Included in Rule 28 (C)

If the Company is requested to extend or add to its single phase lines over 15,000 volts or its polyphase line facilities in order to supply electric service, to supply service from underground facilities, to reinforce its service to Customer, to supply Monthly Service, or to meet other special or unusual conditions, the Company will, after due consideration of the stability of the Customer's business and credit, make such arrangements with the Customer for financing the Company's facilities or guarantee of revenue or a combination of the two, as may be mutually satisfactory; provided, however, that this is done without preference to or discrimination against this Customer or other Customers.

30. Underground Electric Service in New Residential Developments

(a) The following words and terms, when used in this rule only, shall have the following meanings, unless the context clearly indicates otherwise:

(1) Applicant for Electric Service - The developer of a recorded plot plan consisting of five or more lots; or one or more five-unit apartment houses.

(C) Indicates Change Continued on Page No. 4-26

Issued November 3,1998 Effective January 1,1999

WEST PENN POWER COMPANY

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 4-26

RULES AND REGULATIONS (Continued)

(2) Developer - The party responsible for constructing and providing improvements in a development, that is, streets, sidewalks, and utility-ready lots.

(3) Development - A planned project which is developed by a developer/applicant for electric service set out in a recorded plot plan of five or more adjoining unoccupied tots for the construction of single-family residences, detached or otherwise, mobile homes, or apartment houses, all of which are intended for year-around occupancy, if electric service to such lots necessitates extending the Company's existing distribution lines.

(4) Distribution line - An electric supply line of untransformed voltage from which energy is delivered to one or more service lines.

(5) Service line - An electric supply line of transformed voltage from which service is delivered to the residence.

(6) Subdivider - The party responsible for dividing a tract of land into building lots which are not to be sold as utility-ready lots.

(7) Subdivision - A tract of land divided by a subdivider into five or more adjoining unoccupied lots for the construction of single-family residences, detached or otherwise, or apartment houses, all of which are intended for year-around occupancy, if electric service to such lots necessitates extending the Compan/s existing distribution lines.

(b) All distribution and service lines installed pursuant to an application for electric service within a development shall be installed underground; shall conform to Section 57.26 of the Rules and Regulations of the Pennsylvania Public Utility Commission (relating to wire crossings), the Company's construction standards, the specifications set forth in the National Electric Safety Code (NESC), and shall be owned and maintained by the Company. Pad-mounted transformers shall be installed as a Company construction standard. Excavating and backfilling shall be performed by the developer of the project or by such other agent as the developer may authorize. Installation of service-related Company facilities shall be performed by the Company or by such other agent as the Company may authorize. Any street-lighting lines installed then or thereafter within the same development shall also be installed underground, upon terms and conditions prescribed elsewhere in the Company's tariff. The Company shall not be liable for injury or damage occasioned by the willful or negligent excavation, breakage, or other interference with its underground lines occasioned by anyone other than its own employees or agents.

Nothing in this section shall prohibit the Company from performing its own excavating and backfilling for greater system design flexibility. However, no charges other than those specified in (c)(4) of this rule shall be permitted.

(c) The applicant for electric service to a development shall conform with the following:

(1) At Its own cost, provide the Company with a copy of the recorded development plot plan identifying property boundaries, and with easements satisfactory to the Company for occupancy by distribution, service and street-lighting lines and related facilities.

Continued on Page No. 4-27

Issued November 3,1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 4-27

WEST PENN POWER COMPANY

RULES AND REGULATIONS (Continued)

(2) At its own cost, clear the ground in which the lines and related facilities are to be laid of trees, stumps and other obstructions, provide the excavating and backfilling subject to the inspection and approval of the Company, and rough grade it to within six inches of final grade, so that the Company's part of the installation shall consist only of laying of the lines and installing other service-related facilities. Excavating and backfilling performed or provided by the applicant shall follow the Company's underground construction standards and specifications set forth by the Company in written form and presented to the applicant at the time of application for service and presentation of the recorded plot plan to the Company. If the Company's specifications have not been met by the applicant's excavating and backfilling, such excavating and backfilling shall be corrected or redone by the applicant or its authorized agent. Failure to comply with the Company's construction standards and specifications permits the Company to refuse electric service until such standards and specifications are met.

(3) Request electric service at such time that the lines may be installed before curbs, pavements and sidewalks are laid; carefully coordinate scheduling of the Company's line and facility installation with the general project construction schedule, including coordination with any other utility sharing the same trench; keep the route of lines clear of machinery and other obstructions when the line installation crew is scheduled to appear; and otherwise cooperate with the Company to avoid unnecessary costs and delay.

(4) Pay to the Company any necessary and additional costs incurred by the Company as a result of the following:

(i) Installation of underground facilities that deviate from the Company's underground construction standards and specifications if such deviation is requested by the applicant for electric service and is acceptable to the Company.

(ii) A change in the plot plan by the applicant for electric service after the Company has completed engineering for the project and/or has commenced installation of its facilities.

(iii) Physical characteristics such, as oversized lots or lots with extreme set-back where under the Company's line extension policy contained in its tariff mandate a charge for overhead service.

(5) No charges other than those described in paragraph (4) of this subsection shall be bome by the applicant for electric service or by any other utility sharing the same trench, even if the electric Company elects to perform its own excavating and backfilling.

(d) Exceptions: Whenever the Company or any affected person, including the applicant for electric service, believes that the application of the tariff rule works an undue hardship, involves a physical impossibility, or is otherwise inappropriate, such Company or person may request the Pennsylvania Public Utility Commission to grant an exception from the undergrounding requirements of (a) through (c) of this rule by providing the Pennsylvania Public Utility Commission with the following:

(1) A copy of the recorded plot plan of the development for which the exception is being sought;

Continued on Page No. 4-28

Issued November 3,1996 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 4-26

WEST PENN POWER COMPANY

RULES AND REGULATIONS {Continued}

(2) A letter petition setting forth;

(i) the name of the applicant;

{ii) the location and size of the development involved;

{iii) the names of the Company and telephone utility which will provide service to that development;

(iv) the date on which construction began or will begin; whether the development is a new development or one phase in a development to be completed in several phases; and whether facilities in the area surrounding the development have been installed underground or overhead.

(e) Upon the filing of an exception request, Pennsylvania Public Utility Commission Staff will notify the Companies involved and the appropriate local government authority, review the facts stated in the request, and issue to the applicant and the Company an informal written report and decision within 180 days of the request for an exception. Failure of the party requesting an exception to supply sufficient data within the 180 day period shall result in the automatic denial of the request.

(f) The Company or any effected person may appeal the informal decision rendered by the Pennsylvania Public Utility Commission Staff by filing a letter petition with the Secretary of the Pennsylvania Public Utility Commission stating the facts in question and requesting a hearing. All such appeals shall be referred to the Pennsylvania Public Utility Commission Office of Administrative Law Judge for hearing and decision.

(g) If an exception request initiated by an applicant for electric service is granted, and such applicant thereafter desires underground electric service, then (a) and (b) of this rule shall apply as if no exception had been granted.

(h) Applicability: The provisions of this rule shall apply to all applications for service to developments, hereinbefore defined, which are filed after the effective date of the section.

(i) Subdivisions: Underground facilities in new residential developments are only required by (a) through (c) of this rule when a bona fide developer exists, i.e., only when utility-ready lots are provided by the developer. A mere subdivision is not required to have underground service. However, should the lot owner or owners in a subdivision desire underground service, such sen/ice shall be provided by the Company if such lot owner or owners, at their option, either comply with (c) of this rule, or pay to the Company such charges as are contained in Rule 31 (Residential Underground Electric Service not in a Development) for underground electric service not required by this rule.

Continued on Page No. 4-29

Issued November 3,1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 4-29

WEST PENN POWER COMPANY

RULES AND REGULATIONS (Continued)

31. Residential Underground Electric Service Not in a Development

(a) Whenever a Residential Customer requests the Company to supply underground service not covered by the provisions of the Company's Tariff Rule 30 (Underground Electric Service in New Residential Developments), then the Residential Customer shall pay the Company, in advance, the cost differential between the estimated actual cost of supplying such underground service and the estimated actual cost of providing equivalent overhead service including transformer installed cost differential plus any costs as outlined by Rule 28 or Rule 29. The below defined contractor costs, direct labor and direct material costs shall be used in determining the "estimated actual costs". The "estimated actual costs" shall be based upon company-wide estimates of these elements.

1. Contractor costs - Amount paid by the Company to a contractor for work performed.

2. Direct labor costs - Includes pay and expenses of Company employees directly attributable to work performed. Excludes payroll taxes, workmen's compensation, similar items of expense and construction overhead costs.

3. Direct materials costs - includes the purchase price of materials used and excludes the related stores expenses. Proper allowance shall be made for unused materials, and materials recovered from temporary structures, and for discounts allowed and realized in purchase of materials.

(b) All distribution and service lines and related facilities installed pursuant to this Tariff Rule shall conform to the Company's construction and specification standards and the Public Utility Commission Electric Regulations and shall be owned and maintained by the Company. The installation of facilities exclusive of trenching and backfilling shall be performed by the Company or by such other entity as the Company may authorize; the Residential Customer shall be responsible for providing the trenching and backfilling, subject to inspection and approval by the Company. If the Company's construction and specification standards on file with the Public Utility Commission have not been met by the Residential Customer's trenching and backfilling, such trenching and backfilling shall be corrected, or redone, at the Residential Customer's expense. The Company shall not be liable for injury or damage occasioned by willful or negligent excavation, breakage or other interference with Its underground system unless caused by Its own employees or agents.

(c) If requested by the Residential Customer, the Residential Customer shall pay any additional cost incurred by the Company for providing underground service that deviates from the Company's established underground practices and standards.

(C)

(C)

(C) Indicates Change Continued on Page No. 4-30

Issued Novembers, 1998 Effective January 1,1999

WEST PENN POWER COMPANY

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 4-30

RULES AND REGULATIONS (Continued)

EMERGENCY LOAD CONTROL AND CONSERVATION

32. Emergency Load Control (C)

Pursuant to the requirements of 52 Pa. Code §57.52, the following provision is incorporated in this tariff:

(a) A load emergency situation exists whenever (1) the demands for power on all or part of the Company's system exceed or threaten to exceed the capacity then actually and lawfully available to supply such demands, or (2) system instability or cascading outages could result from actual or expected transmission overloads or other contingencies, or (3) such conditions exist in the system of another public utility or power pool with which the Company's system is interconnected and cause a reduction in the capacity available to the Company from that source or threaten the integrity of the Company's system.

(b) In such case, the Company shall take such reasonable steps as the time available permits to bring the demands within the then-available capacity or to otherwise control load. Such steps shall include but shall not be limited to reduction or interruption of service to one or more Customers, in accordance with the Company's procedures for controlling load.

(c) The Company has established procedures for controlling load including schedules of load shedding priorities, may revise such procedures from time to time, and shall revise them if so required by Pennsylvania Public Utility Commission. A copy of such procedures or of the revision thereof currently in effect is available for public inspection at each office at which the Company maintains a copy of its tariff for public inspection, and another such copy is kept on file with Pennsylvania Public Utility Commission.

33. Emergency Energy Conservation (C)

Pursuant to the requirements of 52 Pa. Code Subsection 57.52, the following provision is incorporated in this tariff:

(a) An emergency energy conservation situation exists whenever events result or, in the judgment of the Company, threaten to result in a restriction of the fuel supplies available to the Company or its energy vendors, such that the amount of electric energy which the Company is able to supply is or will be adversely affected. In the event of an emergency energy conservation situation, the Company shall take such reasonable measures as it believes necessary and proper to conserve available fuel supplies. Such measures may include, but shall not be limited to reduction, interruption or suspension of service to one or more of its Customers or classes of Customers in accordance with the Company's procedure for emergency energy conservation.

(b) The Company has established procedures for emergency energy conservation including schedules of load shedding priorities, may revise such procedures from time to time, and shall revise them If so required by Pennsylvania Public Utility Commission. A copy of such procedures or of the revision thereof currently in effect is available for public inspection at each office at which the Company maintains a copy of its tariff for public inspection, and another such copy is kept on file with Pennsylvania Public Utility Commission.

(C) Indicates Change Continued on Page No. 4-31

Issued November 3,1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 4-31

WEST PENN POWER COMPANY

RULES AND REGULATIONS (Continued)

34. Residential Building Energy Conservation Standards

Proof of compliance with, or exemption from, the insulation standards in the Building Energy Conservation Act, Pennsylvania Act No. 222 of 1980, as amended (Act No. 222), must be received by the Company prior to furnishing temporary or permanent service to a new or renovated residential building located in a municipality which has not elected to administer Act No. 222.

Proof of compliance shall be made by furnishing the Company with the "Compliance Certification Copy" of the "Notice of Intent to Construct" form issued by the Pennsylvania Department of Community Affairs.

For details refer to Act No. 222, 35 P.S. Subsection 7201.101, and rules and regulations of the Pennsylvania Department of Community Affairs and the Pennsylvania Public Utility Commission.

The Company, upon request, will provide information and required forms for compliance with Act No. 222.

CONTRACT PROVISIONS AND TAXES ON CONTRIBUTIONS (N)

35. Taxes on Contributions in Aid of Construction (CIAC) and Customer Advances (CAC)

Any CIAC, CAC or other like amounts received from the Customer which shall constitute taxable income as defined by the Internal Revenue Service vn\\ include a component to pay the state and federal income taxes associated with the CIAC or CAC.

(C)

36. Individualized Contracts (C)

The Company at Its sole discretion may enter into an individualized contract with a Customer for the purpose of addressing, among other things, the Customer's (a) business needs, (b) changing operating conditions, (c) less expensive competitive alternatives, (d) financial condition as it relates to maintaining solvency or (e) other matters of mutual benefit to Customer and Company. If requested by the Company, the Customer shall provide to the Company, or at the Compan/s option to an agent representing the Company, all information and records necessary to evaluate the Customer's request for an individualized contract. All costs billed by the agent shall be the responsibility of the Customer.

Terms and conditions of service shall be mutually agreed upon between the Company and the Customer and shall be Included in the contract. The contract may be filed with the Pennsylvania Public Utility Commission. The Company at Its sole discretion may request Pennsylvania Public Utility Commission approval. The contract shall be confidential and treated as such by all parties. For filed contracts, the effective date of the contract shall be no less than thirty (30) days after the date of filing with the Pennsylvania Public Utility Commission. Rates shall be established on a case by case basis and shall be designed to recover, at minimum, all appropriate incremental administrative, operating and maintenance costs of the service, a contribution to fixed costs, and full recovery of Transition or Stranded Costs. Unless specified in the contract special contract discounts shall be allocated pro­rata to the distribution, transmission and generation components of the bill.

The contract shall contain those service terms and conditions and the rates and charges to be paid for service rendered that differ from other provisions of this tariff. Unless altered by the contract, all other provisions of this tariff apply.

(C) Indicates Change (N) Indicates New

Continued on Page No. 4-32

issued November 3,1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 4-32 WEST PENN POWER COMPANY

RULES AND REGULATIONS (Continued)

The Company may require the Customer to provide the Company or its agent with a recent energy audit of the Customer's facilities and a list of all energy conservation and load management activities which have occurred in the past five (5) years along with a list of all ongoing energy conservation and load management activities.

The contract may be terminated immediately by the Company if bills are not paid when due as specified in Tariff Rule No. 27N, before the addition of a late payment charge.

In the event that any contract entered into under this provision is terminated by the Company or Customer under conditions in this tariff or the conditions specified in the contract, the Customer shall subsequently be eligible for service under the standard tariff rate schedule for which the Customer qualifies.

The Company may modify or discontinue the provisions of this rule at any time, subject to any orders of the Pennsylvania Public Utility Commission. Unless otherwise ordered by the Pennsylvania Public Utility Commission, any contracts in effect prior to any such modification or discontinuance of the rule shall remain in effect under the term and conditions specified in the contract.

The Company, at its option, can limit the aggregate Customers' load that qualifies under this provision.

37. Individualized Company Facilities and Services:

The Company may, at Its sole discretion and upon a Customer's request, furnish special, substitute, or additional facilities or services. When the Company provides facilities or services not normally supplied, or when the estimated or actual cost of such individualized, substitute, or additional facilities or services exceeds the estimated costs of the standard facilities or services that normally would be supplied by the Company without special charge, the Company may require special agreements and may establish minimum charges and facilities charges. At a minimum, rates or contract provisions shall be established on a case by case basis and shall be sufficient to recover all appropriate incremental costs of the service and a contribution to fixed costs.

The Company may modify or discontinue the provisions of this rule at any time, subject to any orders of the Pennsylvania Public Utility Commission. Unless otherwise ordered by the Pennsylvania Public Utility Commission, any contracts in effect prior to any such modification or discontinuance of the rule shall remain in effect under the existing term and conditions specified In the contract

38. Changing Electric Generation Supplier (N)

Company shall change Customer's Electric Generation Supplier only upon receipt of electronic notification from the chosen Electric Generation Supplier fn accordance with the Pa. P.U.C. Rules and Regulations as described in the Final Orders on Standards for Electronic Data Transfer and Exchange Electric Distribution Companies and Electric Generation Suppliers. Docket No. M-00960890F0015 and on Establishing Standards for Changing a Customer's Electric Supplier, Docket No. L-00970121. Company will assign an energy flow start date for Customer^ choice of Electric Generation Supplier received after January 15,1999 to be equal to Customer's first normal meter reading date no sooner than 15 days after the date of processing. Changes In Customer's Electric Generation Supplier shall only be effective with Customer's normal meter reading date, regardless of whether the meter reading is actual or estimated.

(N) Indicates New Continued on Page No. 4-33

Issued November 3,1998 Effective January 1,1999

WEST PENN POWER COMPANY

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 4-33

RULES AND REGULATIONS (ConUnued)

39. Payment Processing (N)

When Customer requests that Company provide billing service for Competitive Energy Supply, Company shall provide such service, indicating the charges for the EGS on Customer's monthly bill. Should payments made in response to said billing be less than the full amount billed, payment will be first credited against Company charges until paid in full. The balance will then be credited to the EGS. This partial payment allocation will comply with the Pa. P.U.C. Rules and Regulations as described in the Final Order on Guidelines for Maintaining Customer Services at the Same Level of Quality Pursuant to 66 Pa. C.S. §2807(D). and assuring Conformance with 52 Pa. Code Chapter 56 Pursuant to 66 Pa. C.S. §2a09(E? and (F), Docket No. M-00960890F0011.

40. Setf-Generation Competitive Transition Charge (N)

Any Customer that installs new on-site generation which operates in parallel with the generation on the Company's transmission and distribution system and thereby significantly reduces the Customer's purchases of electricity through the Company's transmission and distribution system on or after January 1,1999, shall pay a monthly Competitive Transition Charge as determined for the Rate Schedules and Riders on which the Customer receives service after the increase in on-site generation. In addition to which, the Customer shall pay monthly, the amount equal to the difference between the current monthly Competitive Transition Charge and the amount of the Competitive Transition Charge calculated using 90 per cent of the average monthly billing determinants established during the twelve months prior to the addition of the on-site generation, the then effective Rate Schedules and Riders and the current Competitive Transition Charges.

(N) Indicates New Continued on Page No. 4-34

Issued November 3,1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 4-34 WEST PENN POWER COMPANY

RULES AND REGULATIONS (Continued)

41. Interim Code of Conduct (N)

The Company and its divisional and/or affiliated EGSs ("Company Supplier") shall comply with the Interim Code of Conduct contained in Appendix H of the Joint Petition for Settlement of West Penn Power Company's Restructuring Plan and Related Court Proceedings at Docket No. R-00973981.

The Interim Code of Conduct will become effective immediately upon Approval by the Commission.

(N) Indicates New Concluded on Page No. 4-35

Issued Novembers, 1998 Effective January 1,1999

WEST PENN POWER COMPANY Supplement No. 140 to Bectric-Pa. P. U. C. No. 39

Original Page No. 4-35

RULES AND REGULATIONS (Concluded)

42. GENCO Code of Conduct (N)

In addition to any other Code of Conduct that might apply, the Competitive Safeguards contained in Appendix G of the Joint Petition for Settlement of West Penn Power Company's Restructuring Plan and Related Court Proceedings at Docket No. R-00973981 ("the Settlement") shall apply to transactions by the Company in its Electric Distribution Company Provider of Last Resort ("Company-EDC") role, or by any divisional and/or affiliated EGS ("Company Supplied), in Pennsylvania from any Company-affiliated entity to the entity ("Company-GENCO") that assets have been transferred pursuant to the Settiement.

Issued November 3,1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 5-1 WEST PENN POWER COMPANY

STATE TAX ADJUSTMENT SURCHARGE

In addition to the charges provided in this Tariff, a surcharge of negative 0.07% will apply to service rendered on or after May 14,1998.

The above surcharge will be recomputed, using the elements prescribed by the Commission.

(a) Whenever any of the tax rates used in calculation of surcharge are changed.

(b) Whenever the Company makes effective increased or decreased rates. (C)

(c) And on March 31,1971, and each year thereafter.

The above recalculation will be submitted to the Commission within ten days after the occunence of the event or date, which occasions such recomputation. If the recomputed surcharge is less than the one in effect the Company will, and if the recomputed surcharge is more than the one then in effect the Company may. submit with such recomputation a Tariff or Supplement to reflect such recomputed surcharge, the effective date of which shall be ten days after filing. (C)

(C) Indicates Change

Issued November 3,1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 5-2 WEST PENN POWER COMPANY

SUSTAINABLE ENERGY SURCHARGE (N)

PURPOSE

This surcharge provides for a fund to promote the development and use of renewable energy and clean energy technologies and efficiency which promote clean energy.

APPLICATION

This surcharge applies to the Distribution Charges included in each Rate Schedule in this Tariff.

SUSTAINABLE ENERGY FUND

The Company will establish a sustainable energy fund which shall be funded from the Distribution Charges in each Rate Schedule at the rate of 0.01 cents per kWh (less applicable gross receipts tax) on all kWh delivered to all Customers beginning on January 1,1999 and ending on December 31, 2003, or until the Commission established new Distribution Charge rates, whichever is longer.

(N) Indicates New

Issued November 3,1998 Effective January 1,1999

WEST PENN POWER COMPANY Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 5-3

COMPETmVE TRANSmON CHARGE (CTC) (NJ

Applicable to All Schedules

The Competitive Transition Charge (CTC) is a non-bypassable charge applicable to all Customers accessing the transmission and distribution network. The CTC is incorporated into all tariff rate schedules and recovers the Company's approved Transition or Stranded Costs plus 11.00% return and applicable Pennsylvania Gross Receipts Tax (Pa GRT). Alternatively, the Company and Customer may mutually agree to a payment schedule that fully collects the same present value of CTC without bypass by the Customer or over-collection by the Company.

Transition Period

The CTC shall apply to all Customers' bills for sen/ice rendered on and after January 1,1999 through DecemberSI, 2008.

Annual CTC Revenue Requirement

The Company shall recover Transition or Stranded Costs through the CTC for service rendered from January 1 through December 31 of each year, according to the following recovery schedule:

Year CTC Revenue'

1999 $122,379,208 2000 $120,708,339 2001 $115,298,313 2002 $112,946,724 2003 $112,281,400 2004 $104,172,492 2005 $99,268,835 2006 .$97,559,763 2007 $96,507,884 2008 $97,472,963

* Does not include PA Gross Receipts Tax (GRT)

CTC Revenue Requirement Allocation

The revenue requirement of the CTC shall be allocated on a class basis using the production capacity allocators shown in the following table:

Rate Schedule Percent

10 35.1596 20,23.24 14.0755

22 0.5222 30.86 22.9785

40 17.0322 41 0.1837 46 8.4212 44 0.2511

Street Lighting 0.2532 (N) Indicates New

Concluded on Page No. 5-4

Issued Novembers, 1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 5-4

WEST PENN POWER COMPANY

COMPETITIVE TRANSITION CHARGE (CTC) (Concluded)

Special Contracts

Customers served under special contract shall pay the CTC of the Rate Schedule under which the Customer was most recently served or would have been served under existing conditions. No contract shall permit bypass of the CTC.

Self-Generation

Customers installing and operating self-generation on or after January 1, iggg shall be subject to a CTC as outlined in Rule 40.

Reconciliation

The Company shall file an annual reconciliation of Transition or Stranded Costs recovered through the CTC by rate class. Any over or under-recovery shafl be applied to the CTC Revenue Requirement of the subsequent year and the CTC rates shall be adjusted accordingly and filed together with the reconciliation for approval by the Commission.

Issued November 3,1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 6-1

WEST PENN POWER COMPANY-

DOMESTIC SERVICE SCHEDULE 10

AVAILABILITY

Available for single-phase service to a single-family residence served through one meter.

MONTHLY RATE (For a Single Residence) (C)

DISTRIBUTION CHARGES

FIXED DISTRIBUTION CHARGE

$ 4.73 PER MONTH

VARIABLE DISTRIBUTION CHARGE

All kilowatt-hours $0.01699 per kilowatt-hour

TRANSMISSION CHARGES

All kilowatt-hours $0.00303 per kilowatt-hour Ancillary Service (all kilo watt-hours)

Scheduling, System Control & Dispatch $0.00000 per kilowatt-hour Energy Imbalance $0.00000 per kilowatt-hour Reactive and voltage control $0.00019 per kilowatt-hour Regulation and Frequency Response $0.00020 per kilowatt-hour Spinning Reserve $0.00054 per kilowatt-hour Supplemental Reserve $0.00048 per kilowatt-hour

The transmission charges are based on the Company's Pro Forma Open Access Transmission Tariff which will change from time to time and is subject to Federal Energy Regulatory Commission (FERC) approval.

COMPETITtVE TRANSITION CHARGE

All kilowatt-hours $0.00654 per kilowatt-hour

GENERATION CHARGE

All kilowatt-hours $0.03221 per kilowatt-hour This generation charge applies only to Customers receiving PLR service from Company. The generation

charge does not apply to Customers obtaining Competitive Energy Supply.

Tax Adjustment Surcharge (C)

The Tax Adjustment Surcharge included in this Tariff applies to charges under this Schedule.

(C) Indicates Change Concluded on Page No. 6-2

Issued Novembers, 1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 6-2

WEST PENN POWER COMPANY

SCHEDULE 10 (Concluded)

Late Payment Charge

The above net rates apply if the current bill is paid in full within 20 days of the date of such bill and if all previous undisputed bills have been paid in full. A late payment charge of 1.25% per month of the unpaid balance of a bill will be made for failure to make payment in full by the due date. These charges are to be calculated on the overdue portion of the bill only. Such interest rate when annualized shall not exceed 15% simple interest per annum. A late payment charge on a disputed bill may be reduced or eliminated by the Company, or upon order by the Commission, to facilitate payment by the disputing Customer.

WATER HEATING

Water heaters shall be storage type equipped with a pressure-temperature, relief valve located in the top of the tank and an over-temperature cutoff switch. Heating elements shall not exceed 5,500 watts each, shall be for 200 volts or more, shall be thermostatically controlled, and shall be interlocked to prevent simultaneous operation. The water heater, wiring, and piping shall also conform to Company standards in all other respects.

GENERAL (C)

Compensating for Transmission and Distribution Losses.

Multiplying Customers' on-peak metered energy by 1.09333 and off-peak metered energy by 1.04808 produces the generation energy that must be delivered to the West Penn system. The transmission losses included in these factors are based on the Company's Pro Forma Open Access Transmission Tariff which will change from time to time and is subject to Federal Energy Regulatory Commission (FERC) approval.

When two or more residential units up to a maximum of five units are supplied through a single meter, each shall be classed as a Single Family Residence, and the above appropriate Monthly Rate shall apply to each.

This Schedule is available for single-phase service to farms when supplied along with service for the residence through one meter.

Combination residential and commercial service may be taken on this Schedule when the entire service is taken through one meter and the total commercial connected load does not necessitate upgrade of service facilities.

(C) Indicates Change

Issued November 3,1998 Effective January 1,1999

•

Supplement No. 140 to Electric-Pa. P.U.C. No. 39

Original Page No. 7-1

WEST PENN POWER COMPANY

GENERAL SERVICE SCHEDULE 20

AVAILABILITY

Available for any purpose not included with the Availability of Schedule 10, Domestic Sen/ice, if all service at an establishment is supplied under this Schedule.

MONTHLY RATE ( c )

DISTRIBUTION CHARGES

Minimum kilowatts $1.19 per kilowatt Energy Charge (kWh)

First block kilowatt-hours $0.02803 per kilowatt-hour Second block (next 700) kilowatt-hours $0.01320 per kilowatt-hour Third block (next 7,500) kilowatt-hours $0.01184 per kilowatt-hour Additional kilowatt-hours $0.01153 per kilowatt-hour

TRANSMISSION CHARGE

Minimum kilowatts $0.33 per kilowatt Energy Charge (kWh)

First block kilowatt-hours $0.00648 per kilowatt-hour Second block (next 700) kilowatt-hours $0.00235 per kilowatt-hour Third block (next 7,500) kilowatt-hours $0.00200 per kilowatt-hour Additional kilowatt-hours $0.00192 per kilowatt-hour Ancillary Service (all kilowatt-hours)

Scheduling, System Control & Dispatch $0.00000 per kilowatt-hour Energy Imbalance $0.00000 per kilowatt-hour Reactive and voltage control $0.00018 per kilowatt-hour Regulation and Frequency Response $0.00019 per kilowatt-hour Spinning Reserve $0.00052 per kilowatt-hour Supplemental Reserve $0.00046 per kilowatt-hour

The transmission charges are based on the Company's Pro Forma Open Access Transmission Tariff which will change from time to time and is subject to Federal Energy Regulatory Commission (FERC) approval.

COMPETITIVE TRANSITION CHARGES

Minimum kilowatts $0.52 per kilowatt Energy Charge (kWh)

First block kilowatt-hours $0.01212 per kiiowatt-hour Second block (next 700) kilowatt-hours $0.00572 per kilowatt-hour Third block (next 7,500) kilowatt-hours $0.00518 per kilowatt-hour Additional kilowatt-hours $0.00506 per kiiowatt-hour

(C) Indicates Change Continued on Page No. 7-2

Issued November 3,1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 7-2

WEST PENN POWER COMPANY

SCHEDULE 20 (Continued)

GENERATION CHARGE

Minimum kilowatts $2.59 per kilowatt Energy Charge (kWh)

First block kilowatt-hours $0.06066 per kilowatt-hour Second block (next 700) kilowatt-hours $0.02863 per kilowatt-hour Third block (next 7,500) kilowatt-hours $0.02596 per kilowatt-hour Additional kilowatt-hours $0.02533 per kilowatt-hour

This generation charge applies only to Customers receiving PLR sen/ice from Company. The generation charge does not apply to Customers obtaining Competitive Energy Supply.

The first energy block shall consist of 300 kilowatt-hours plus 30 kilowatt-hours for each one-half kilowatt of Customer's Demand in excess of 5 kilowatts.

Minimum Charge

Minimum charges from above per kilowatt of Customer's Demand of the current month but not less than 50% of the kilowatt capacity necessary to serve Customer.

The kilowatt capacity necessary to serve Customer shall be the larger of the two: a) The highest Customer's Demand in the last 12 months, or

b) The kilowatt capacity stated on the Electric Service Agreement (if an Agreement exists).

Tax Adjustment Surcharge

The Tax Adjustment Surcharge included in this Tariff applies to charges under this Schedule.

Late Payment Charge

The above net rates apply if the current bill is paid in full within 15 days of the date of such bill and if all previous undisputed bills have been paid in full. A late payment charge of 1.25% per month of the unpaid balance of a bill will be made for failure to make payment in full by the due date. These charges are to be calculated on the overdue portions of the bill only. Such interest rate, when annualized, shall not exceed 15% simple interest per annum.

DETERMINATION OF CUSTOMER'S DEMAND

The Customer's Demand of any month shall be the maximum fifteen-minute kilowatt demand, but shall not be less than one kilowatt for each meter. Demands will be taken at the nearest one-half kilowatt.

Pending the installation of a demand meter. Customer's Demand shall be determined by dividing the kilowatt-hour consumption by 200.

(C)

(C) Indicates Change Concluded on Page No. 7-3

Issued November 3,1998 Effective January 1,1999

•

Supplement 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 7-3

WEST PENN POWER COMPANY

SCHEDULE 20 (Concluded)

GENERAL

Compensating for Transmission and Distribution Losses.

For service at less than 1,000 volts, multiplying Customers' on peak metered energy by 1.09333 and off-peak metered energy by 1.04808 produces the generation energy that must be delivered to the West Penn system. For service between 1,000 and 15,000 volts, the multipliers are 1.07447 and 1.04325 respectively. The transmission losses included in these factors are based on the Company's Pro Forma Open Access Transmission Tariff which wilt change from time to time and is subject to Federal Energy Regulatory Commission (FERC) approval. (N)

The demands and kilowatt-hours, respectively, of connections of different voltage and phase at an establishment being combined for biliing purposes as of July 7, 1976 may continue to be so combined. All other connections shall be billed separately.

When Company installs local transformer capacity to supply a highly fluctuating load, a facility charge of 2.1% net per month of the cost of additional transformer capacity required by the highly fluctuating load shall be made.

A single family residence located within an establishment used also for other purposes may be separated electrically and billed as a separate connection under the appropriate residential rate schedule if Customer so desires.

TERM

Customer may leave the firm service provision of this schedule once in a 12 month period. Service other than firm sen/ice will be provided as described below under MONTHLY SERVICE.

MONTHLY SERVICE

Monthly Service is supplied under this Schedule when Customer advances the net cost of connection and disconnection under the provisions of the applicable financing plan. Charges shall be increased 10% and Minimum Charge based on 50% of the kilowatt capacity necessary to serve Customer shall be waived. The minimum charge shall be based on Customer's demand for the current month, but not less than one kilowatt.

Monthly Service shall not be available for standby or maintenance sen/ice such as that required for alternative generation facilities.

SPECIAL PROVISION

In accordance with Pennsylvania Act 103 of 1985 volunteer fire company service and non-profit senior citizen center service may, upon application, be billed at the pricing of Domestic Service, Schedule 10. The execution of a contract for a minimum term of one year is required.

(N) Indicates New

Issued November 3,1998 Effective January 1,1999

•

Supplement 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 8-1

WEST PENN POWER COMPANY

CHURCH AND SCHOOL SERVICE SCHEDULE 22

AVAILABILITY

Available only to locations now served hereunder and to locations for which definite rate commitments have been made as of August 30,1979. This Schedule is applicable for Churches. Public and Parochial school buildings and non-profit Colleges and Universities and associated buildings for any purpose if all service at an establishment is supplied under this Schedule.

MONTHLY RATE (C)

DISTRIBUTION CHARGE

Minimum Charge $1.75 per connection Energy charge (kWh)

First Btock (0-300 WJowatt-hours) $0.03367 per kilowatt-hour Second Block (301-1200 kilowatt-hours) $0.02837 per kilowatt-hour Third Block (Over 1,200 kilowatt-hours) $0.02487 per kilowatt-hour

TRANSMISSION CHARGE

Minimum Charge $0.43 per connection Energy charge (kWh)

First Block (0-300 kilowatt-hours) $0.00573 per kilowatt-hour Second Block (301-1200 kilowatt-hours) $0.00444 per kilowatt-hour Third Block (Over 1,200 kilowatt-hours) $0.00359 per kilowatt-hour Ancillary Service (all kilowatt-hours)

Scheduling, System Control & Dispatch $0.00000 per kilowatt-hour Energy Imbalance $0.00000 per kilowatt-hour Reactive and voltage control $0.00033 per kilowatt-hour Regulation and Frequency Response $0.00034 per kilowatt-hour Spinning Reserve $0.00093 per kilowatt-hour Supplemental Reserve $0.00084 per kilowatt-hour

The transmission charges are based on the Company's Pro Forma Open Access Transmission Tariff which will change from time to time and is subject to Federal Energy Regulatory Commission (FERC) approval.

COMPETITIVE TRANSITION CHARGE

Minimum Charge $0,56 per connection Energy charge (kWh)

First Block (0-300 kilowatt-hours) $0.01083 per kilowatt-hour Second Block (301-1200 kilowatt-hours) $0.00912 per kilowatt-hour Third Block (Over 1,200 kilowatt-hours) $0.00800 per kilowatt-hour

(C) Indicates Change Continued on Page No. 8-2

Issued November 3,1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 8-2

WEST PENN POWER COMPANY

CHURCH AND SCHOOL SERVICE SCHEDULE 22 (Continued)

GENERATION CHARGE

Minimum Charge $2.92 per connection Energy charge (kWh)

First Block (0-300 kilowatt-hours) $0.05615 per kilowatt-hour Second Block (301-1200 kilowatt-hours) $0.04732 per kilowatt-hour Third Block (Over 1,200 kilowatt-hours) $0.04148 per kilowatt-hour

This generation charge applies only to Customers receiving PLR service from Company. The generation charge does not apply to Customers obtaining Competitive Energy Supply.

Tax Adjustment Surcharge

The Tax Adjustment Surcharge included in this Tariff applies to charges under this Schedule.

SPACE HEATING

This Space Heating provision is available only to locations being served prior to October 31,1972. i

When Customer uses electric energy as the only means of space heating in his establishment, all use in the establishment will be billed as follows except as provided under Water Heating.

DISTRIBUTION CHARGE

Minimum charge $1.75 per connection Energy charge (kWh)

First Block (0-300 kilowatt-hours) $0.03367 per kilowatt-hour Second Block (Over 300 kilowatt-hours) $0.01968 per kilowatt-hour

TRANSMISSION CHARGE

Minimum charge $0.43 per connection Energy charge (kWh)

First Block (0-300 kilowatt-hours) $0.00640 per kilowatt-hour Second Block (Over 300 kilowatt-hours) $0.00300 per kilowatt-hour Ancillary Service (all kilowatt-hours)

Scheduling, System Control & Dispatch $0.00000 per kilowatt-hour Energy Imbalance $0.00000 per kilowatt-hour Reactive and voltage control $0.00024 per kilowatt-hour Regulation and Frequency Response $0.00025 per kilowatt-hour Spinning Reserve $0.00067 per kilowatt-hour Supplemental Reserve $0.00061 per kilowatt-hour

The transmission charges are based on the Company's Pro Forma Open Access Transmission Tariff which will change from time to time and is subject to Federal Energy Regulatory Commission (FERC) approval.

(C)

(C) Indicates Change Continued on Page No. 8-3

Issued Novembers, 1998 Effective January 1,1999

•

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 8-3

WEST PENN POWER COMPANY

SCHEDULE 22 (ConUnued)

COMPETITIVE TRANSITION CHARGE

Minimum Charge...- • $0.56 per connection Energy charge (kWh)

First Block (0-300 kilowatt-hours) $0.01083 per kilowatt-hour Second Block (Over 300 kilowatt-hours) $0.00633 per kilowatt-hour

GENERATION CHARGE

Minimum Charge $2.92 per connection Energy charge (kWh)

First Block (0-300 kilowatt-hours) $0.05615 per kilowatt-hour Second Block (Over 300 kilowatt-hours) $0.03282 per kilowatt-hour

This generation charge applies only to Customers receiving PLR service from Company. The generation charge does not apply to Customers obtaining Competitive Energy Supply.

At Customer's option energy used for space heating may be separately metered and billed as follows:

MONTHLY RATE (Separately Metered Space Heating) (C)

DISTRIBUTION CHARGES

Minimum charge $1.93 per connection All kilowatt-hours $0.02061 per kilowatt-hour

TRANSMISSION CHARGE

Minimum charge $0.47 per connection All kilowatt-hours $0.00317 per kilowatt-hour Ancillary Service (all kilowatt-hours)

Scheduling, System Control & Dispatch $0.00000 per kilowatt-hour Energy Imbalance $0.00000 per kilowatt-hour Reactive and voltage control $0.00024 per kilowatt-hour Regulation and Frequency Response $0.00026 per kilowatt-hour Spinning Reserve $0.00070 per kilowatt-hour Supplemental Reserve $0.00063 per kilowatt-hour

The transmission charges are based on the Company's Pro Forma Open Access Transmission Tariff which will change from time to time and is subject to Federal Energy Regulatory Commission (FERC) approval.

COMPETITIVE TRANSITION CHARGES

Minimum Charge $0.60 per connection All kilowatt-hours $0,00663 per kilowatt-hour

(C) Indicates Change Concluded on Page No. 8-4

Issued November 3,1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 8-4

WEST PENN POWER COMPANY

SCHEDULE 22—{Concluded)

GENERATION CHARGE

Minimum charge $3.25 per connection All kilowatt-hours $0.03436 per kilowatt-hour

This generation charge applies only to Customers receiving PLR service from Company. The generation charge does not apply to Customers obtaining Competitive Energy Supply. WATER HEATING

Standard Heaters

Each water heater shall have a minimum tank capacity of 40 gallons. Water heaters shall be equipped with a pressure-temperature relief valve located in the top of the tank and an over-temperature cutoff switch or shall comply with applicable governmental regulations. The lower and upper heating elements shall not exceed 20 watts and 30 watts per gallon of tank capacity respectively or 5,500 watts each, whichever is greater. Heating elements shall be thermostatically controlled and shall be interlocked to prevent simultaneous operation of the lower and upper elements. The water heater, wiring and piping shall also conform to Company standards in all other respects.

High Capacity Heaters

When Customer uses electric energy as the only means of space heating, water heating service will be supplied at the heating rate for total element capacity not exceeding 150 watts per gallon of tank capacity. Elements shall be arranged for operation in successive steps.

When Customer uses electric energy as the only means of space heating, water heating for swimming pools will be supplied at the heating rate when installations conform to Company standards.

GENERAL

Compensating for Transmission and Distribution Losses.

For service at less than 1,000 volts, multiplying Customers' on peak metered energy by 1.09333 and off-peak metered energy by 1.04808 produces the generation energy that must be delivered to the West Penn system. For service between 1,000 and 15,000 volts, the multipliers are 1.07447 and 1.04325 respectively. The transmission losses included In these factors are based on the Company's Pro Forma Open Access Transmission Tariff which will change from time to time and is subject to Federal Energy Regulatory Commission (FERC) approval. (N)

The kilowatt-hours of connections at an establishment being combined for biliing purposes as of July 7,1976 may continue to be combined. All other connections shall be billed separately.

A single family residence located within an establishment used also for other purposes may be separated electrically and billed as a separate connection under the appropriate residential rate schedule if Customer so desires.

TERM One month or longer.

(N) Indicates New

Issued November 3,1998 Effective January 1,1999

Supplement 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 9-1 WEST PENN POWER COMPANY

ATHLETIC FIELD LIGHTING SERVICE SCHEDULE 23

AVAILABILITY ( c>

Available for connections served under provisions of this Schedule as of August 28, 1985 for outdoor lighting and for incidental use, through one meter for Athletic Fields sponsored by public or parochial schools, communities, civic organizations or other public institutions. The Customer's Demand for biliing shall be 50 kilovolt-amperes or more.

MONTHLY RATE (C)

DISTRIBUTION CHARGES

Minimum Charge $4.50 Minimum kVA $0.09 Energy Charge (kWh)

First block (20 kWh/kVA) $0.01239 per kilowatt-hour Second block (excess) $0.00599 per kilowatt-hour

TRANSMISSION CHARGE

Minimum Charge $1.50 Minimum kVA $0.03 Energy Charge (kWh)

First block (20 kWh/kVA) $0.00162 per kilowatt-hour Second block (excess) $(0.00070) per kilowatt-hour Ancillary Service (all kilowatt-hours)

Scheduling, System Control & Dispatch $0.00000 per kilowatt-hour Energy Imbalance $0.00000 per kilowatt-hour Reactive and voltage control $0.00031 per kilowatt-hour Regulation and Frequency Response $0.00033 per kilowatt-hour Spinning Reserve $0.00089 per kilowatt-hour Supplemental Reserve $0.00080 per kilowatt-hour

The transmission charges are based on the Company's Pro Forma Open Access Transmission Tariff which will change from time to time and is subject to Federal Energy Regulatory Commission (FERC) approval.

COMPETITIVE TRANSITION CHARGES

Minimum Charge $2.50 Minimum kVA $0.05 Energy Charge (kWh)

First block (20 kWh/kVA) $0.00616,per kilowatt-hour Second block (excess) $0.00255 per kilowatt-hour

Concluded on Page No. 9-2. (C) Indicates Change

Issued Novembers, 1998 Effective January 1,1999

Supplement No. 140 to Electric-Pa. P. U. C. No. 39

Original Page No. 9-2 WEST PENN POWER COMPANY

ATHLETIC FIELD LIGHTING SERVICE SCHEDULE 23 (Concluded)

GENERATION CHARGE

Minimum Charge $52.50 Minimum kVA $1.05 Energy Charge (kWh)

First block (20 kWh/kVA) $0.12871 per kilowatt-hour Second block (excess) $0.05317 per kilowatt-hour

This generation charge applies only to Customers receiving PLR service from Company. The generation charge does not apply to Customers obtaining Competitive Energy Supply.

The first energy block shall be a quantity of kilowatt-hours numerically equal to 20 hours' use of Customer's Demand.

Minimum Charge (C)

As specified above.

Tax Adjustment Surcharge (C)

The Tax Adjustment Surcharge included in this Tariff applies to charges under this Schedule.

Late Payment Charge

The above net rates apply if the current bill is paid in full within 15 days of the date of such bill and if all previous undisputed bills have been paid in full. A late payment charge of 1.25% per month of the unpaid balance of a bill will be made for failure to make payment in full by the due date. These charges are to be calculated on the overdue portions of the bill only. Such interest rate, when annualized, shall not exceed 15% simple interest per annum.

DETERMINATION OF CUSTOMER'S DEMAND

The Customer's Demand for any month shall be the maximum fifteen-minute kilovolt-ampere demand, but not less than 50 kilovolt-amperes.

GENERAL

Compensating for Transmission and Distribution Losses.

For service at less than 1,000 volts, multiplying Customers' on peak metered energy by 1.09333 and off-peak metered energy by 1.04808 produces the generation energy that must be delivered to the West Penn system. For service between 1,000 and 15,000 volts, the multipliers are 1.07447 and 1.04325 respectively. The transmission losses included in these factors are based on the Company's Pro Forma Open Access Transmission Tariff which will change from time to time and is subject to Federal Energy Regulatory Commission (FERC) approval. (N)

Customer shall pay the net cost of connection and disconnection and facilities shall remain in place from season to season.

TERM One month or longer.

(C) Indicates Change (N) Indicates New

Issued November 3,1998 Effective January 1,1999