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August 21, 2017

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Ms. Jocelyn BoydChief Clerk & AdministratorPublic Service Commission of South CarolinaSynergy Business Park, Saluda Building101 Executive Center Drive, Suite 100Columbia, SC 29210

Re: Duke Energy Carolinas, LLC's Prepaid Advantage SC Learnings ReportDocket No. 2015-136-E

Dear Ms. Boyd:

Enclosed for filing is Duke Energy Carolinas, LLC's ("DEC") Prepaid Advantage SCLearnings Report. The report was a part of a pilot program approved by thisCommission by Order No. 2015-334 in Docket No. 2015-136-E. Subsequently, inOrder No. 2016-325, DEC received an extension of the pilot until July 12, 2017 and atwelve-month extension to file this report.

If there are any questions about this filing please contact us.

Yours truly,

Frank R. Ellerbe, III

FRE:tch

Enclosure

cc w/enc:Shannon Bowyer Hudson, ORS Deputy Director Legal Services (via email)Heather Shirley Smith, Deputy General Counsel (via email)Rebecca J. Dulin, Senior Counsel (via email)Kim H. Smith, Regulatory Affairs (via email)

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1310 Gadsden Street I PO Box 11449I Columbia, SC 29211

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MERI TAS LAW FIRMS WORLDWIDE

SOWELL GRAY ROBINSON STEPP LAFFITTE, LLC SOWELLGRAY COH

DUKE ENERGY CAROLINASPREPAID ADVANTAGE PILOTLEARNINGS REPORT

Docket No. 2015-136-EPublic Service Commission of South Carolina

Duke Energy Carolinas, LLC

Duke Energy Carolinas Prepaid Advantage Pilot

Table of ContentsProgram Description.

Summary of the Prepaid Advantage Pilot.

Eligibility.

Program Requirements/Program Design

Goals/Objectives ..

Pilot Learnings..

Validate that technology and data exchanges work as designed.....

Measure customer behavior and satisfaction..

Track participant data and behaviors in order to evaluate need and feasibility of furtherprogram expansion .. . ....................................................................... 7

Participation / Enrollment .

Payments 4 Deferred Dalances .

Disconnects and Reconnects.

Customer Satisfaction Survey Results.

Customer Energy Usage Patterns ............

Conclusion...

Appendix

Sample of Prepaid Advantage Customer portal with .

Energy Efgciency Tips..

Unsolicited Customer Feedback..

13

... 15

... 16

18

18

... 18

... 18

Customer Satisfaction Survey Results with participating customers — March 2016 ............. 18


Program Description

On April 1, 2015, Duke Energy Carolinas, LLC ("DEC" or the "Company) filed in Docket No. 2015-136-E for approval to implement a prepay pilot program ("Pay-As-You-Go", "Pilot" or "PrepaidAdvantage" ) in South Carolina. On May 12, 2015, the Public Service Commission of SouthCarolina ("Commission" ) issued Order No. 2015-334 approving the Pilot for the duration of oneyear, effective July 12, 2015. Subsequent to Order No. 2015-334 the Company requested onApril 15, 2016 an extension of the Pilot until July 12, 2017 and a twelve month extension to file

the report required by Commission Order No. 2015-334, which the Commission approved in

Order No. 2016-325 on April 27, 2016. On November 30, 2016 in Order No. 2016-813 theCommission approved the Company's request to change the name of the Pay-As-You-Go Pilot

Tariff to the Duke Energy Prepaid Advantage Pilot. Furthermore on June 21, 2017 theCommission, in Order No. 2017-400, approved the Company's request to extend the Pilot

through October 31, 2017 and also increase the participant cap from 1,000 to 1,600participants.

The Duke Energy Prepaid Advantage Pilot is designed for residential customers on non-time ofuse rate schedules, where the Company has installed advanced metering infrastructure (AMI)

technology at the residence, and the customer is not participating in optional Riders (e.g. RiderPM or Rider NM) or classified as a "special need" or "medical certificate" moratorium customer.The Company anticipated high interest from customers who have a preference for receivingdigital alerts, and who seek more timely information on their electricity consumption thanprovided by bills rendered after electricity has been used.

Eligible customers are able to:

~ Leverage an existing security deposit to pre-purchase energy (if a customer has anexisting security deposit with the Company);

~ See usage and electricity costs on a daily basis from anywhere via the web — even withtheir Smartphone;

~ Set notification preferences, receive notifications and view the account information 24hours a day, 7 days a week;

~ Have more choice in payment options, giving the customer the flexibility to determinewhen to pay and how much based on the customer's lifestyle and receipt of income;

~ Receive energy saving tips and recommendations to become more efficient and allowthem to extend their account balance

The Pilot is open to a maximum of 1,600 eligible customers in DEC South Carolina for thepurpose of ensuring that it operates as designed.

The original Pilot target area consisted of 14 zip codes around Spartanburg and Greenvillecounties, as those counties included some AMI meters. A specific segment of customers was nottargeted. The 14 zip codes chosen were due to AMI availability.


As referenced above on April 27, 2016 the Commission approved the extension of the Pilot

through July 12, 2017, which allowed the Company to expand the Pilot into the remaining zip

codes within the DEC SC service territory, which significantly increased the eligible customerpopulation. Several zip codes within the Company's service territory experienced AMI

deployment, and the rest are on schedule for deployment. Expanding the pilot-eligible territoryenabled the Company to offer the Pilot to a larger population of customers, providing theopportunity for enhanced learnings on how best to communicate and promote to customers. It

also provided a larger set of data to enable improved learnings to inform future offerings orrefinements and to consider recommendations for further expansion.

Summary of the Prepaid Advantage Pilot

The Pilot was designed to test the program's ability to give customers the choice, control, andflexibility to pay, in real time, for electricity. The technology used for the Pilot enablesresidential customers to see their electric consumption on a daily basis, as well as on a monthlybasis. Recommendations put forth by the Coastal Conservation League (CCL) and the SouthernAlliance for Clean Energy (SACE) indicated the desire to provide customers with near real-time,15 minute interval energy usage data. The Company believes that while this recommendation is

appropriate and in the best interest of customers, at this time the transfer of such largequantities of data is cost prohibitive, but is an enhancement the Company continues to assessthe feasibility of implementing. Customers are able to view this information along with currentaccount balance details via a web portal on a computer or smartphone, as well as receive alertsthrough text messages, email, and automated outbound calls (see Appendix for sample image ofweb portal). Customers utilize this information to recognize higher than usual electricityconsumption on a daily basis, to understand the drivers for bills that may be different thanexpected, and have more direct control over their bills while being more cognizant of how theyuse electricity. The Prepaid Advantage program in November 2016 implemented dynamic tipsfor customers to show ways they can become more efficient in their use of their electricity,ultimately helping them reduce their consumption. CCL and SACE believed that this type ofcustomer program has the ability to operate as an energy efficiency program, and supports thethis type of prepay program being EE given research shows the potential for significant energysavings.

As of July 20, 2017, 953 customers are participating in the Pilot. In this Pilot, the Company'sprocesses and technology limited it to offering this program to only current customers. Withincreased automation and integration with the Customer Care Center planned for August 2017,the Company will have the capability to offer Prepaid Advantage to all current and newcustomers of Duke Energy Carolinas that are eligible for the Pilot, which will likely create asignificant increase in the number of participating customers .


Eligibility

Eligible customers are located in the Pilot target area, which consists of all Duke Energy

Carolinas South Carolina service territory zip codes. The Pilot is available to residentialcustomers in this area who are on Schedule RS, RE, or ES, who have a certified AMI Meter, andwho are not served on Schedule WC, optional riders, the Equalized Payment Plan or automaticpayment options. Medical Alert, Special Needs, or Medical Certificate (moratorium) customersare not eligible.

The Company also acknowledges the comments submitted by CCL and SACE regarding theeligibility of Time-of-Use (TOU) customers, due to the complex nature of billing for multiple rateschedules that vary by time of day on a daily basis bares too large a cost to implement for a

small number of customers. The legacy billing systems were not designed to handle intervaldata and daily rate calculations therefore it would require a major redesign. Currently only2,224 customers are on TOU rates on the Duke Energy Carolinas system. If this numberincreases and/or enhancements in technology allow for this complex billing to occur, theCompany will reassess its ability to allow these customers to participate. Customers with

separately metered services on the same account or those subscribing to non-regulated servicemay still participate, but the residence service would be established on a separate account. The

Company marketed the Pilot to eligible customers through direct mail, email and other directchannels, as well as integration with Customer Care Operations.

Program Requirements/Program Design

Eligible customers must:~ Have an email address~ Make an advance payment of at least $40~ Have no past due balance in excess of $300

The Company allows eligible customers with outstanding balances to participate in the Pilot andapportions 40 percent of each payment amount to outstanding balances and 60 percent of thepayment amount to fund future and ongoing usage. Past due balances continue to accrue a

finance charge at the Commission-approved rate until the past due balance is paid. There are notraditional deposits required unless a customer exits the program and returns to a traditionalbilling schedule. There is no monthly fee to participate in the Pilot. In addition, new customersare required, like all new customers to DEC, to pay a $ 1$ connection charge.

The customer is not charged a service fee of $1.50 for the first two payments in a calendarmonth made online or by telephone using a credit/debit card or check. After the first twopayments in a calendar month made online or by telephone using a credit/debit card, a $1.$0convenience fee will be charged for use of this service. These fees are typically charged by a


third party and, as such, DEC does not receive the monies from such fees. Customers paying in

person can choose to go to a free payment location or to a location where a vendor may chargea fee. There are no minimum payment requirements after the initial $40 payment.

Customers who do not replenish their accounts and as a result, reach a $0 balance, are notified

of pending disconnect with disconnection occurring the following business day (Monday

through Friday), no earlier than 10:00 am and normally not after 2:00 pm. Service is notdisconnected after 4:00 p.m. or on weekends, or holidays. Upon paying any balance and payingan amount sufficient to create a positive account balance, a customer whose service is

disconnected has service restored within minutes to a few hours. However, if the customer fails

to bring the account into a positive balance within 5 business days, the account is final billed andthe customer has to reapply and reestablish an electric service account. The Company is notcharging a reconnection fee in the Pilot.

Goals/Objectives

The primary goals for the Pilot were to:

~ Validate that technology and data exchanges work as designed between DEC and thevendor, as well as with the Customer

~ Measure customer behavior and satisfaction~ Track participant data and behaviors in order to evaluate need and feasibility of further

program expansion

Pilot Learnings

The Company believes that the Pilot has been successful. The Pilot has validated the technicalfeasibility, customer interest in the offering, and answered many important questions that will

enable the Company to move to the next phase of expanding the offer as an energy efficiencypilot. Prior to the June 21, 2017 extension (in Order No. 2017-400), the Company was unable toreach the 1,000 participating customer cap for the Pilot; however reaching 1,000 customers wasneither a goal nor requirement of the program. The Company believes that the current numberof participating customers is sufficient to obtain the data required to provide the learningsneeded to validate the success of the Pilot. The following key takeaways were learned from thePilot:

Validate that technology and data exchanges work as designedThe Pilot in DEC was implemented using a third-party vendor, PayGo Electric (PayGo). All

physical equipment (such as AMI meters) was provided by the Company. PayGo supported thedevelopment of a web-based customer facing user interface, a dynamic interface and dashboardfor DEC customer service specialists, and channels for data transmittal (i.e. meter data) to andfrom the Company.


Based on the Company's findings, the current processes and supporting technology that theCompany has implemented are sufficient to successfully support the expansion of this programinto an energy efficiency pilot that will assess and validate the program's potential to be a costeffective energy efficiency program . The Company has confirmed that the data transfer, datacapacity, and communications between PayGo, the Company, and the Customer(s) areperforming as intended. DEC plans to continue using PayGo for the proposed programexpansion.

Measure customer behavior and satisfactionOver the span of the Pilot, the Company has actively captured customer feedback for customersthat are (1) interested and eligible, (2) interested and ineligible, (3) eligible and enroll and (4)eligible but choose not to enroll in the program. A majority of the feedback received is positiveand focuses on the additional flexibility that customers experience in making payments tomaintain a positive balance with the Company and the ability to see daily usage information.

Conversely, constructive feedback has been received from Customers that has helped to shapechanges for program expansion.

Some programs currently offered by the Company preclude an eligible customer fromparticipating. Several of these customers have expressed interest in participating in PrepaidAdvantage, but are currently disqualified in order to continue to participate in their originalprogram. As processes are updated and technology improves, the Company will continue toassess ways for more customers to participate.

Direct feedback in the form of customer quotes can be found in the appendix.

Track participant data and behaviors in order to evaluate need andfeasibility of further program expansionPrior to the pilot the Company made a commitment to collect the following data from theoperation of the pilot, this included: Number of payments per month and average paymentamount per customer; number of nonpayment disconnects and reconnects; Customer energyusage patterns; Customer satisfaction; and number of customers who chose to withdraw fromthe pilot and the reason for removal. This data has been a critical component to monitoring andevaluating customer behaviors, trends, and business impacts. Using the three categories below,and subsequent supporting metrics, the Company is able to understand the comprehensiveimpacts to the Company's operations.

More specific information about many of the Company's metrics can be found in the tablebelow.

Participation / Enrollment~ Total Customers Enrolled- The number of customers enrolled into the program has

contributed significantly to improvements in marketing and acquisition and customer


engagement tactics. The Company understands the need to include this program at thepoint of connection for residential energy service (Start Service flow) to allow call centerspecialists to offer the program during their initial conversation with the customer.Upon implementation, this should further increase program participation.

~ Total Customer Unenrollment- Unenrollment in the program has maintained a steadypace throughout the Pilot. Various factors have contributed to customer unenrollmentincluding: moves from AMI to non-AMI premises, inability to request deferred paymentarrangements (DPAs), an agreement in which the Customer is allowed to start makingpayments at some specified time in the future vs. immediately, and perceived programcomplexity. Quantitative and qualitative unenrollment data has helped to determineareas of improvement in customer communications, technology, and programflexibility/eligibility.

The chart below details the current participation metrics as of July 20, 2017. 953 customerswere actively participating in the Pilot. Another 257 customers have signed up to participate,but haven't paid their initial 340 to become active on the program. This represents a total of1,210 customers that have either signed up (have not made the S40 initial payment) or areactively participating in the program.

The Participation chart below describes the participation funnel for customers in the Pilot, alongwith the number of customers who became disinterested in participating once enrolled. Thefollowing descriptions were applied to each status category:

~ Signed up and pending — customer has completed the Web enrollment form, but is

pending qualification of eligibility. Pending status could include deferred balanceamount exceeds $300, customer has pre-certified AMI meter and is awaitingcertification, or an update was needed related to third-party credit check.

~ Signed up and qualified — customer has completed the Web form and has met all

eligibility requirements, but has not paid their initial $40 balance.~ Disqualified from participating — customer did not meet all eligibility requirements.

Customers were disqualified for the following reasons: incomplete enrollment, no emailaddress, moving with no known forwarding address, no certified AMI meter, residenceoutside of DEC SC, ID verification issues, medical alert status, or participation in anotherproduct or service that excluded customer from eligibility.

~ Initial payment paid and participating — active number of customers participating in theprogram as of July 20, 2017. The Company does not consider a customer enrolled in thePilot until they have setup their account and made the advanced payment of $40.

~ Participants removed — total number of participants previously participating in theprogram who are no longer participating. See Removal chart on the following page fordetails on why customers were removed from the program.


As ofJuly 20, 201 7

Customer Unenrollment

The table below shows that 338 customers have left the program throughout the Pilot durationdue to a customer request to exit the program or due to a customer being removed for "Did notpay status over 5 business days." Approximately 34% of these customers cited moving to alocation that Prepaid Advantage was not available as their reason for no longer participating.AMI meters have been deployed throughout Pilot duration; many customers would like tocontinue participation with an AMI meter at the new location. Reasons for removal due tomoving/AMI not available at the new location have decreased as a result as customer eligibilityhas expanded. Other reasons customers left were their perception that payments were toodifficult to manage or they preferred their previous payment approach.

Roughly 20% of the customers who have enrolled in the program during the Pilot period (August20150uly 20, 201 7) have left the program to return to post-pay billing methods (either due topreference or to participate in programs that conflict in terms of eligibility with PrepaidAdvantage).


Reason 9 of Customers Sf of Customers

Moved — out of territory or no AMI meter 116 34.316

Too Difficult To Manage Payments 24.9%

Prefers Previous Payment Approach 70 20.7%

Feels like I am Paying More 20 5.916

Want ability to apply for Deferred PaymentArrangement

Did Not Pay Status Over 5 days

Issues with usage or adjustment 2.4%

Wants to go on Equal Payment Plan 3.396

Issues Getting Reconnected 0.9%

Unable to Get Reason From Customer

Went On Net Meteding 0.3%

Issues with Deferred Balance Transfer- deposit wasnot applied correctly 0.316

Fraud 0.3%

As of1uly 20, 2017

The three aforementioned categories: issues with usage or adjustment, issues gettingreconnected once they were disconnected for non-pay, and issues with deferred balancetransfer mean the following:

~ Issues with usage or adjustment — the Company didn't apply deposits or thecorrect billing amount from old account

~ Issues getting reconnected once they were disconnected for non-pay~ Issue with adjustment or usage - usage was input incorrectly

All of these issues were caused by process errors that resulted in dissatisfaction by the Customerand as a result left the program. These issues will be resolved with automation of functionalitythat will be delivered in late August 2017. Additionally, processes have been developed, withassigned resources, to monitor the application of previous post-pay deposits to PrepaidAdvantage accounts and parameters have been put into place to identify exceptions to

10


adjustment amounts. Process modifications have also been made to address reconnectionissues to ensure that customers are reconnected as soon as possible upon receipt of payment.

Payments & Deferred BalancesPayment Summary

Total Customers Who Made a

Total Made

TotalAverage Number of Payments Per Customer while

Total - 6/1/15-Present

1192

15,993

13

Total - Last 30days

872

3,039

Dollars

Amount to Deferred

77

Deferred Amount

% of Deferred Amount PaidAs ofJuly 20, 201 7

82. 1%

~ Totoi Payments Mode (Count) -Approximately 16,000 payments valuing 6640K havebeen made during the Pilot period. The total number of payments made by customersenrolled in the program and customer feedback indicates that customers value theability to pay multiple times vs. once at the end of the month.

~ Average ff of Payments Per Customer over 30 Doy Period- Payment frequency dataindicates that most customers enrolled in the program make more than one paymentper month, showing that customers also value the ability to make multiple, smallerpayments throughout the month to pay for their electric power. Prior toimplementation of DEC's Pilot, industry benchmarks indicated customers pay onaverage four times per month. DEC found customers made on average three paymentsper month.

~ Average SS Amount per Payment — Customers participating in this Pilot made anaverage payment of approximately $40. Lower payment amounts indicate thatcustomers prefer to track their usage and keep their account balance positive withfunds as the account depletes (vs. making one lump sum payment). Customers on thisprogram have the flexibility to make a payment of any amount. The 872 total customersthat made payments in the last 30 days being less than the 953 participants on theprogram at that time can be attributed to some customers making larger sum paymentsin the previous 30-day periods. Milder weather in the shoulder months contribute tofewer payments required from the customer within a 30-day period. Conversely, severeweather months can lead to an increase in payments. Customers are not required tomake a payment until their balance approaches zero. This data, along with customerfeedback helped the Company shape the proposed redesign of the 75/25 usage vs.

11


arrears split to help with swings in pricing. This data has provided evidence regardingthe increased choice and convenience that this program offers.

~ Total Payment Amount ($$) — Total payments show the success of the program in

a'llowing customers to not only pre-purchase their power, but also the collection of pastdue amounts (deferred balance). Customers were able to contribute approximately

$69K to past due amounts on their accounts.~ Total Amount Applied to Deferred Baionces- During the Pilot, the portion of the Total

Payment Amount that contributes to customers'eferred balances was monitored.Many of these customers would have been disqualified for electric service or werefacing impending disconnects. This program provided flexibility to customers to avoiddisconnection and catch up on their arrears amounts while maintaining service. Datashows that, when the option is available, many customers also leveraged their depositsto pay off past due balances. Out of all customers that joined the Pilot, 746 had a

deposit on their previous post-pay account. This successful collection of past debt hashelped capture the value of the program in reducing the amount of past due balancesheld in arrears. The average deferred balance that was carried over was $142.58. Thehighest deferred balance that was carried over was $568.02 (S300 is the limit that is settoday. Customers with higher than $300 are not eligible for the program. 61 customershad deferred balances that increased above $300 between the time they signed up forthe program and paid their initial S40 to enroll. DEC plans to increase the deferredbalance threshold to S500 as it looks to expand the program). The lowest deferredbalance that was carried over was S.07.

~ Total Remaining Deferred Amount- Tracking the amount of overall deferredagreements in the program helped the Company understand the impact of customerscoming into the program with a deferred arrangement, as well as the impact tocustomers who came off the program and returned to post-pay billing. 594 customersenrolled in the Pilot with a deferred balance. 468 of those 594 customers have paid offtheir deferred balance while participating in the Pilot. The remaining 126 customerscontinue to have a deferred amount and are currently paying towards that amount.While the customer remains enrolled in the program, it allows for some certaintyaround the collection of this amount.

~ % ofDeferred Amount Paid-The large percentage of deferred amounts that have beencollected shows the success of this program in providing customers a way to catch-upon their deferred payment arrangements and become current with the Company. Theaverage payoff period for customers coming into the Pilot was one month, with amaximum payoff period of eight months. By applying a percentage of every payment tothe deferred balance, customers are able to make steady progress in getting theirdeferred balance down to zero.

12


Disconnects and ReconnectsThe Company's goal and objective for tracking and monitoring disconnects and reconnects wasto assess the number of customers that get disconnected and reconnected, and how frequentlythat occurred.

~ ¹ Of Disconnects — Customers participating in the Pilot have been disconnected a totalof 698 times. The highest number of disconnects for one customer account is 44. Thelowest number is 0, and the average is .6, which makes the average number ofdisconnects per customer less than 1. The total amount of disconnects for customers onthe program shows that most customers are actively maintaining a positive balance withthe Company, as much as possible. The value of the Pilot comes from the ability tomonitor usage and take action to become more efficient regarding their electricityconsumption.

~ Amount of time between disconnect and reconnect - The total average disconnectiontime for all customers participating in the program is five hours and 34 minutes. This

represents the total time between a customer being disconnected and then makingpayment. The maximum time between disconnection and making a payment was 21hours and 14 minutes. Additionally the average time between when a payment is madeand the customer is reconnected was approximately 16 minutes.

~ ¹ Of Reconnects — The total amount of reconnects is closely correlated to the number ofdisconnects, further validating that even when customers were disconnected because ofa $0 balance, they contributed to their account to become active again. The differencein disconnects and reconnects is attributed to 11 customers over the entire pilot periodthat allowed their account to final bill after staying disconnected for five (5) days.

At of Jttty 20, 2017* Data os ofMay 21, 201 7

Customer Satisfaction Survey ResultsIn March 2016, all participating customers were surveyed regarding their experience with theprepaid program. 52 customers provided responses, and a summarized quantitative analysis oftheir responses is provided below. Additionally, qualitative feedback and/or commentary weresolicited from respondents and a comprehensive list is included in the Appendix.

13


Where 10 means "completely satisfied" and 0 means "not at all satisfied" please rate your overalsatisfaction with the PayrAs.you.GD Pilot Program.

35

25

15

10

0

od

31

5 u h cr

7

Would you aay that your participation in the pay-Aa-You-Go paot program hnu had a poaitlve effect, ~negative effect orna effect on your overaa aatlafactlon with Duke Energyy

45

40

35

25

20

15

10

A Pcnutive Effect A Negative Effect No Effect

14


Customer Energy Usage PatternsBecause an earlier prepaid EE pilot offered by DEP was unsuccessful and unable to verifycustomer savings due to the ineffective technology deployed, DEC chose not to propose thePilot as energy efficiency ("EE") program in April 2015. The Company believes that the programhas the potential to produce significant energy savings for customers, but wanted todemonstrate and validate that the technology utilized for Prepaid Advantage worked andcreated a positive customer experience first. While the current test was not designed todetermine energy savings to justify an energy efficiency program, DEC recognized this potentialand has proactively tracked energy usage during the Pilot duration in order to give a preliminaryindication of the potential to transform the Pilot into a suitable EE program in the future.

Research confirms that residential prepay programs can generate significant energy savings andhigh levels of customer satisfaction. For example, the Salt River project's 2016 Energy EfficiencyReport states that participants in its M-Power prepay program have reduced their energy usageby an average of 1296, and 9796 of participants reported they feel that M-Power could help a lotof people if they were aware of its benefits.'n addition, a report released in February 2016 byESource confirmed that prepay programs across the country yield average participant energysavings from 10 — 1496.'dditionally, a survey by energy consulting firm DEFG found that aboutone-third of respondents said they were interested in prepaid electric services, a figure thatjumps to about SO percent for the 18-to-34 demographic.'he raw data from the very smallsample of pilot participants indicates that there appears to be a reduction in consumerconsumption versus customers in a control group, however, the results are not conclusive.Tracking and reporting required 12 months usage history pre and post joining the PrepaidAdvantage Pilot. This resulted in a very small sample size of 74 participants who met thiscriterion. DEC believes that greater results, in both sample size and level of confidence in energysavings projections will become available with the full deployment of AMI and the increasedeligibility of customers. This leads the Company to believe that the true energy efficiency impactwill be able to be measured and validated after the Company's proposed energy efficiency pilot.

'Salt River Project, 2016 Energy Efficiency Report, available athtt: www.sr net com about financial dfx 2016EERe ort df'source, The Current State of Prepay, available athtt s'wwesource cpm DSM-RB-13 Pre a -Savin s'eFG, "Prepay Energy Primed for Growth in Utility Sector", available athtt def Ilc com news article re a -ener - rimed-for- rowth-in-utili -sector

The chart below illustrates estimated energy savings for customers on Prepaid Advantage with12 months pre- and post-treatment usage data (known as the treatment group) compared to a

matched comparison group of non-participants (known as the matched control group). Each

group was developed using up to 12 months of pretreatment consumption history. Thetreatment group and matched control group were matched within the same geographic area,rate category and as closely as possible on pretreatment usage and weather patterns. The net

15


energy savings are calculated using a difference-in-differences (DiD) approach that comparesthe change in energy usage for each participant in the two groups (treatment versus matchedcontrol) between the pre-and post-participation periods.

DEC Customer Control Group versus DEC Prepaid Advantage Participants

Preliminary analysis indicates that the treatment group of Prepaid Advantage customers hasseen a reduction in energy usage compared to the control group. Given the sample size of 74customers in the treatment population and a confidence level at 6896 in the analysis, theestimated percentage of energy savings at this time is 8.5896. The proposed EM &V plan for theEE Pilot filing would provide a confidence/precision level of 9096 / E 1096.

Conclusion

The Company has sincere appreciation to the South Carolina Office of Regulatory Staff and thePublic Service Commission of South Carolina for allowing the company to pilot this PrepaidAdvantage program. The Company would also like to thank early adopters for providing suchrobust insights to help improve this program for future participants.

Overall learnings from the DEC Prepaid Advantage Pilot conclude that the Pilot offered in DEC's

South Carolina service territory has been well received by participating customers. The PrepaidAdvantage Pilot provides customers increased convenience, choice, and transparency with theability to more dynamically manage their energy usage and budget. Program evaluations andcustomer surveys completed with enrolled participants in the Pilot indicate improved customersatisfaction.

16


Some adoption barriers remain such as: full deployment of AMI meters, customers participatingin other Duke Energy Carolinas programs that are curreritly disqualified, and enhancements toprogram design to make it easier to participate. Others can be overcome through additionaldesign functionality and increased customer eligibiTity. Most importantly, the underlyingtechnologies are now more widely available, making it easier for the customer to participate.

The overall implementation cost for the program is approximately $3.5M to-date. This totalrepresents significant upfront costs to operationalize the program and includes items such as:vendor costs, Duke Energy IT costs, and labor needed to implement and support the program.This upfront investment to date has allowed the Company to validate the feasibility of aprogram that could support a larger number of customers needed to validate its energyefficiency potential and ultimately be rolled, out as a full scale offering. Additionally, this upfrontinvestment will allow the annual costs necessary to support and expand the program to be farlower on a per customer basis(i.e. limited to vendor fees and internal labor) given no significantimplementation costs will be required to support the increase in scale.

With the recent extension of the program, the South Carolina Prepaid Advantage Pilot willterminate in October 2017. Pilot learnings to date, anecdotal participant feedback, and industrybenchmarks provide the Company with data to support the basis for an energy efficiencyprogram in the future. As a result, DEC believes that it is appropriate to transition this programinto an energy efficiency pilot. This pilot will seek to determine and validate the magnitude ofthe energy efficiency savings that are realized through the energy efficient engagementdesigned into the program.

The Company will continue to explore a number of options to enhance the prepaid experiencefor customers. This includes investigating opportunities to expand the program, such ascontinuing to customize enhanced energy efficiency tips and suggestions, and possibly lookingat including additional rates in the future.

In the coming weeks, the Company intends to file a two-year Energy Efficiency Pilot in DEC

South Carolina and North Carolina as a necessary step towards a commercialized offer uponvalidating energy savings and demonstrating cost effectiveness.

17


Appendix

Sample of Prepaid Advantage Customer portal withEnergy Efficiency Tips

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0 Uryers Ne Nst ana canwmmnt mn ney use a kerr or energy rur Nymg adust one Nsa or uwnery each wack can sam you g%loads of money and energy Rememtmr, you csn do h year round right m your home - no sunshine N clotheshne requlrmp Tryhanplng wm lauimty on hangers ar doonrnohs, or even laying h aal an dry towels Alfnost anyuham can weml yoo Iug nf eslep1 Try lur dlyutg /usta few sama from each load aml watch youf savings hegtn to urtlom

Unsolicited Customer FeedbackOne customer described their experience as, NI like that I canjust pay what l want, when I want.I can build up a credit once I get my past due paid offinstead of waiting for a bill each monthand paying whatit says."

Other customers say that they "really love this because I can keep track of my power." NI likethat you can see what you use each day. It really encourages you to use less." And "It makes meaware of what ofpaying per day. It's plain. It's easier than figuring out my bill. I was paying $9 aday now I'm down to $6 a day. The day- to-day cost helps me realize where I'm spending it ahThat's my favorite part of the program."

"I don't want to lose my home repair plan. I want to keep that."

Customer Satisfaction Survey Results with participating customers—March 2016

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Why do you say tho Pay Aa Yrnucko Pgot Program hos had a Poaltlve effect on year overagsatisfaction with Duke Energy

It has helped me monitor my power usage.

I can keep track of how much power I'm usingAnd I can make smsg peymenls

lls so easy to pay I love this program thank you

Just having options. being able to break up paymenl and staying aware of daily usage

I think the program is innovative snd that il shows that Duke Power is lislenmg to the needs of its customers. Ilalso shows that Duke Power will work with the less fortunate people to help them keep their power wifh smalleramounts Io pay at e time. I love ttss program snd Duke Power.

II helps lo keep up with the bill end not to lst the balance get so high but il seems as you pay more every 2weeks.

lt is convenient for me and 1st's me choose the amount I pay.

I was able lo make changes on how we live & actually see the power bill go down.

A great way to monitor my daily energy use.

Two reasonn The first rs that it hes bede me more aware of my energy usage. By being aware, I am able to workmore lowards conserving. The second reason is that because evwylhing is automatic I don't worry about payingIhe bilL $1 00 withdrawn from my account every time I hli the low balance point is great for me

you can watch your dagy consumption each day.

II is easy lo use. end I have a much better sense of my power usage patterns.

Have more control over paying when I have funds, so no need to deal with extending payments, no customer senrke calls.

lts pretty positive so far. Pay what you can when you can helps out.

It has been nice to make payments when I get paid

I have always been satisfied with Duke

I can monitorwhat I am spending and how much power bring used

I like paying little bits at a time

I never get s huge bi0 that's looming ahead.

r feel i am mudr more In control of my energy consumption and therefore In charge of my bill. I feel like duke bss provided mewith a great tool for contml of my energy dogarx

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I can keep track of my power that! use, which saves me money.

Because I am more conscious of leaving fights on when not In use an I don't leave things plugged that are not being used. Beingable to check my usage on line whenever I choose Is a plus. lastly I love not getting a high bgl monthly.1 pray that Duke Energycontinues to offer the pay-as-ycudfo program It Is great. I give Duke an A plus l

It easy and convenient

Because I cankeep upwlthhowmuchpowerl'musing. Plusl canbudget it morebetter.

I don' have to wony paying a large amount at once and being afraid to open my electric statement.

This program has really helped me through hard times. Not afi energy suppliers have a program like this.

The program allows me to pay my bfilfor kwh as I use it.. It also allows me to pay more in the low usage months and build acredit for those high summer bills. Thank you for having this progmm for your customers l

It is a positive experience to see how much energy I actiagydo conserve throughout the year and versus paying monthly I pay agat 1time less hassle also.

program worked well, gives customer flexibigty of..arayments, know where you stand at afi times, can monitor usage and cutback when necessary, can see patterns with the weather, easy to use, wife can review data as well

I can pay anytime I have extra cash

It alknvs me to pay on my schedule, mther than once a month.

Before, I could not keep up with my bill. I would forget to pay my power bill, the power would get cut off, and I would have to payag these late fees. Now, I pay the amount I can pay; and If for some reason I forget, I get an emag showing me my balance so I

can get money in the account.

you don't have a large bil at once

I have no overdue balance now and I am more aware of my electric use.

It afiows me to mntral my bfils during a tough economic time for my famgy The customer mrvke staff has been more thanhelpful and very efficient during this process as well.

It has helped me a lot by watching what I use.

The program has afiowed me to see what I use on a dagy basis, nmdify use when approaching an predetermined average degyvalue, and allows me to pay when I have the money with out tear of extra, undfiordable late fees.

It helps with my budget, since I don't get penallxed for late payments

It b nice not of have money tied up in a deposit.

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Sures partlcipatlng ln Pay&a-youvGO, do you feel that you have used:

What type of tlusgs have yeti dobe to Iiae less ohelgi/'?

Turn oft unused appliances Keep lights off when I'rn not using lhem

Kept lights oft if nol needed being more aware of what im using

Cul ott more hghls

I remember lo turn oft lights, Tvs, and fans in rooms thai r am nol in I am also more aware of what thingsshould be lumed off when not in use, like computers and lamps t for night hghlsl I turn Ihe computers off sndbought smaller plug in rsghl lights

I Unplugging chargers al'ter charging electronic devices 2 Culhng off sa I ghls when not in use 3 Umiting theamounl of hmes laundry is washed per week 4 Keeping the Ihermostat sel al one lemperalure

Using the light bulbs that Duke sent 8 unplugging INngs we don'I use everyday

Weathenze Tum off more unused appliances and electronics

monitor my daily useage and make adluslmenls

Turned dowri my water heater and Ihermoslal

turn off lights snd televisions et night

Used less energy by makmg sure small apphances are disconnected when nol in use, lights off when nol neededan payed dose allenlmn to Ihermostal dunng the venter season

Turning off lights more not playing Iv when I leave the house

Keeping lights off more often

Unplug Ihe appliances that we do nol use(ex lights. powerslnps, docks elc)

Keeping my Ihermostasl on one sel lamp as much as possible

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Keeping an eye on what I use

Use less heat and air conditioning

monitor weather and cut back where you can, shift load cycle to off peak days

Monitor usage, turn og gghts, set thermostat, unplugged appgances when not In use..

turning gghts od,lowering thermrutat

Unplug Items not in use, using more natural light and heating and air opposed to electronic.

Watched It more

The headed/ air

Turning off lights, unplugging dwrgers.

I just turn olf lights when I leave roonu and unplug my laptops when I leave home for awhge.

Adjusted thermostat, lower heat at night, consolidated cooking more meals at one time, packed dhhwasher more, gghts off

Turning off power when not needed.

Taming olf the gghts

Unplugging whal's not heing used

cut lrghts, radios, and anything not being used oN more often

Adjusted my thermostat bought energy efficient Iht bulbs used weather strips amund doors and windows when It was colder

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Documents

Q SOWELL GRAY - South Carolina