PES PROGRAM SEPTEMBER 2015

Agenda

•Program Update

•Current Rates

•Proposed Rates

•Program Benefits

•Enrollment Process

2

Production History

3

Production History

4

4 Bcf

21%

5.5 Bcf

23%

6.25 Bcf

25%

8 Bcf

24%

Production History

• New production impact

11 wells added 2013

5 wells added 2014

1 well added 2015

• 24.5% decline in gathered volumes

5

PEP & PES History

• PEP 2002

• 10 new compressors, 18 mmcfd capacity

• $10.9 M investment

• PES 2005

• Installation on new water vapor treatment facilities at

compressors

• Participating producers have new standards for water vapor saturation

• PRC committee was formed

• PES 2010 • Interstate pipeline capacity for off-system deliveries

6

Compression • 14 Compressor Stations

• 23 Compressor Engines

• 14,175 Installed HP

• 50 MMcfd into Equitrans ACV

• 15 MMcfd into Peoples Transmission/Distribution

• 11 Engines are 1963 or older. 40 MMcfd Capacity

Dehydration • 9 Glycol Dehy’s

• 3 Gas Chillers

7

Peoples Transmission & Compression

8

Maximum Allowable Water Vapor Level

9

For all Production Enhancement Fee Paying Volumes

0

10

20

30

40

50

60

70

80

90

100

110

120

130

140

150

160

170

180

190

200

210

220

230

5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 200 300 400

Pipeline Pressure

Maximum Allowable Water Vapor Content

#/mmscf

PES Off System Activity

Annual

4,254,222 4,250,933

7,712,355

3,106,174

2,152,016 1,966,905

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

2010 2011 2012 2013 2014 2015

Monthly

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

Jan-1

0

Jun-1

0

No

v-1

0

Apr-

11

Sep-1

1

Feb

-12

Jul-1

2

De

c-1

2

Ma

y-1

3

Oct-

13

Ma

r-1

4

Aug-1

4

Jan-1

5

Jun-1

5

10

Peoples Update • In 2015 Peoples filed with PUC for combined gas cost for Peoples Gas

and Equitable

• This will permit the construction of interconnections to increase the flow of gas from Peoples to Equitable

• PUC approved combined gas cost effective October 2015

• In 2015 Peoples filed with the PUC for combined transportation program for Peoples Gas and Equitable

• PUC approved combined transportation program effective April 2016

• In late 2015, Peoples will file with PUC for combined gas cost for Peoples Gas and Peoples TWP

• This will permit the construction of interconnections to increase the flow of gas from Peoples to Peoples TWP

• In late 2015, Peoples will file with PUC for combined transportation program for Peoples Gas and Peoples TWP

• By October 2016, producer gas behind Peoples can be used to serve customers of Peoples, Equitable an Peoples TWP

11

Transportation Interstate Supply

12

PES Project Review Committee

13

PRC Project Delivery Reciept Volume Description

Miller Interconnect PNG EGC 2 mmcfd Increase efficiency at Limstone DTI Off-System

Spruce Interconnect PNG EGC 5 mmcfd

Village Interconnect EGC PNG 2 mmcfd

Fisher Interconnect EGC PNG 5 mmcfd

Swank Control Valve PNG PNG Minimize EQT volumes delivered to PNG

Turtle Creek Interconnnect PNG EGC 40 mmcfd Optimize local production to EGC market

Egry Interconnect PNG PTWP 4 mmcfd Increase efficiency of gathering compressor

Hill Interconnnect EGC PNG 2 mmcfd Outlet for trapped local production

Patton Regulator PNG PNG Outlet for trapped local production

Shoemaker Interconnect PNG EGC 2 mmcfd Outlet for trapped local production

Valley #3 Temp Compressor PNG PNG 10 mmcfd 6 month temporary compressor

Arnold Interconnect PTWP PNG 10 mmcfd Balance deliveries from PNG to PTWP

Kittanning Interconnect PNG EGC 10 mmcfd Outlet for trapped local production

Girty Interconnect PNG PTWP 10 mmcfd Alternative outlet for production

Coxcomb Interconnect PNG EGC 40 mmcfd Optimize local production to EGC market

Blairsville Interconnect PNG PTWP 4 mmcfd Outlet for trapped local production

$4.5 Million Investment

PES Potential Capital Projects

• Replacing aging compressor facilities

• Upgrading compression to meet RACT 2

emission standards

• Redeploying compressors to match production

needs

• Replacing aging dehydration facilities

• Optimizing gathering through interconnects to

bring Peoples local supply to market across all

three utilities

14

PES Current Rates

15

• Gathering - $0.32 / Mcf

• Transmission - $0.17 / Mcf

• Compression Operations & Maintenance

• Dehydration Operations & Maintenance

• Gathering Pipeline Operations & Maintenance

• MOA Audits

• Gathering UFG

• Compressor & Dehydration Fuel

• PES is a Negotiated Rate below Cost of Service Rate

• Interstate Pipeline Capacity Charge - $0.1659 / Mcf

• Off-System Transportation 35,000 Mcf/Day Rural Valley or Truittsburg

• $500,000 per month or $6,000,000 per year

PES Proposed Rates

16

• Gathering - $0.32 / Mcf

• Transmission - $0.17 / Mcf

• Compression Operations & Maintenance

• Dehydration Operations & Maintenance

• Gathering Pipeline Operations & Maintenance

• MOA Audits

• Gathering UFG

• Compressor & Dehydration Fuel

• PES is a Negotiated Rate below Cost of Service Rate

• Interstate Pipeline Capacity Charge - $0.1659 / Mcf

• Off-System Transportation 35,000 Mcf/Day Rural Valley or Truittsburg

• $500,000 per month or $6,000,000 per year

PES Benefits

• PES rates are lower than the cost of service • Compressor and dehydration operations and maintenance

• est. $9 million annually or $0.30

• Compressor and dehydration fuel • est. 0.65 bcf or 2.2%

• Gathering pipeline operations and maintenance • est. $12 million annually or $0.40

• Gathering unaccounted for gas • est. 1.75 bcf or 5.8%

• Transmission pipeline operations and maintenance • est. 2.5 million annually or $0.08

• Equitrans AVC Capacity • $0.317 / dth plus 2.42% retainage

17

PES Enrollment Process

• Peoples distributed enrollment forms at this meeting

• Peoples is mailing enrollment forms to every producer

• Peoples will post enrollment forms on Peoples website.

• Peoples requests completed enrollment forms by November 1, 2015.

• Agreement goes into effect April 1, 2016.

18

PES Amendment Agreement

• Extends the PES 2005 agreement until the

effective date of Peoples’ next PUC Base Rate

Case (No sooner than January 1, 2018)

• Removes the off-system pipeline capacity fee and

the gas retainage charge for off-system deliveries

(currently $0.1658/mcf and 0.23%)

• Current rates are frozen ($0.32 gathering $0.17

transmission)

• Requires 80% producer participation by volume

19

QUESTIONS

20