PENNSYLVANIA PUBLIC UTILITY COMMISSION

Public Meeting held October 31, 2013

Docket Number: M-2013-2389036

BUREAU OF TECHNICAL UTILITY SERVICES

REPORT ON THE QUARTERLY EARNINGS

OF JURISDICTIONAL UTILITIES

FOR THE PERIOD ENDED

June 30, 2013

Robert F. Powelson, ChairmanJohn F. Coleman, Jr., Vice ChairmanJames H. Cawley, DissentingPamela A. WitmerGladys M. Brown

TABLE OF CONTENTS Page No.

Introduction ..................................................................................................... 5Peoples TWP, LLC, Pennsylvania American Water Company, The York Water Company, and Duquesne Light Company had a pending rate filing at Docket Nos. R-2013-2355886, R-2013-2355276, R-2012-2336379, and R-2013-2372129 respectively, and filed a letter with the Secretary in place of a report in accordance with 52 Pa. Code § 71.4.

Attachment A – Summary of Equity Returns……………………………… 6

Attachment B – Summary of Returns............................................................ 10This chart depicts the overall and equity returns (actual and adjusted) for the filing utilities for the current quarter. The last authorized equity return and the year authorized is also shown.

Attachment C – Allowed Rates of Return on Common Equity.................... 13This is a historical chart that shows the most recent fully litigated rate cases for select companies in electric, gas, and water. A docket number followed by their final return on equity and year is also given.

Attachment D – Market Based Returns on Equity – Electric...................... 14The market indicated common equity cost rate range consists of data used from the electric barometer groups and is based on a series of calculations to average the DCF methods. Also indicates Distribution System Improvement Charge Return.

Attachment D – Electric Barometer Group Calculation of a Current and 52 Week Average Dividend Yield..................................................................................................................................................................................................................................15

Barometer water companies are used to calculate a current DCF in the first chart. The second chart demonstrates the companies 52 week average DCF. A final average of the two calculations is also shown at the bottom.

Attachment D – Development of a Representative Dividend Growth Rate…………………………………………………..........

........................................................................................ 16Multiple sources of the Barometer water companies projected 5 year Earnings Per Share are used to calculate the Group Average Dividend Growth Estimate.

Attachment D – Common Equity Ratios of Electric Barometer Companies 17The Common Equity Ratios of Electric Utility Barometer Companies table depicts each company’s common equity ratio. The range of reasonable equity ratios consists of the lowest and highest common equity ratio in the quarter for the barometer group companies.

Attachment D – Capital Structure and Cost of Debt and Preferred Stock 18The Capital Structure and Cost of Debt and Preferred Stock table is taken from the Schedule E and Schedule F of each Pennsylvania electric company’s quarterly earnings report.

Attachment E – Market Based Returns on Equity – Gas.........................................................................................................................................................................................................................19

The market indicated common equity cost rate range consists of data used from the gas barometer groups and is based on a series of calculations to average the DCF methods. Also indicates Distribution System Improvement Charge Return.

3

Attachment E – Gas Barometer Group Calculation of a Current and 52 Week Average Dividend Yield.......................................................................................................................................................................................................................................20

Barometer water companies are used to calculate a current DCF in the first chart. The second chart demonstrates the companies 52 week average DCF. A final average of the two calculations is also shown at the bottom.

4

Attachment E – Development of a Representative Dividend Growth Rate…………………………………………………..........

........................................................................................ 21Multiple sources of the Barometer water companies projected 5 year Earnings Per Share are used to calculate the Group Average Dividend Growth Estimate.

Attachment F – Market Based Returns on Equity – Water.....................................................................................................................................................................................................................22

The market indicated common equity cost rate range consists of data used from the water barometer groups and is based on a series of calculations to average the DCF methods. Also indicates Distribution System Improvement Charge Return.

Attachment F – Water Barometer Group Calculation of a Current and 52 Week Average Dividend Yield..................................................................................................................................................................................................................................23

Barometer water companies are used to calculate a current DCF in the first chart. The second chart demonstrates the companies 52 week average DCF. A final average of the two calculations is also shown at the bottom.

Attachment F – Development of a Representative Dividend Growth Rate…………………………………………………..........

........................................................................................ 24Multiple sources of the Barometer water companies projected 5 year Earnings Per Share are used to calculate the Group Average Dividend Growth Estimate.

5

Introduction:

On September 20, 1991, the Commission initiated a rulemaking at L-00910061 pertaining to earnings disclosures by the public utilities subject to its jurisdiction. At that docket, the Commission stated that the submission of accurate, reliable and complete earnings disclosure reports, at regular intervals, is essential to the fulfillment of the broad regulatory oversight responsibilities entrusted to the Commission by the Legislature in the Public Utility Code. The earnings disclosure regulations promulgated by the Commission were adopted October 1, 1992, and published January 23, 1993 at, 23 Pa.B 463. Based upon those regulations, codified at 52 Pa. Code, Chapter 71, a reporting format was developed and distributed to the jurisdictional fixed utilities of Pennsylvania.

All fixed utilities having jurisdictional revenues of $1,000,000 or more, for a calendar year, are required to file the report by March 31 of each year. Such reports are to be based upon the results of operations for the 12-month period ending December 31 of the prior year. Utilities having more than $10,000,000 in jurisdictional revenues are also required to file reports for the 12 months ending on March 31, June 30, and September 30 of each year. On November 30, 2004, however, the Pennsylvania General Assembly signed into law Act 183 concerning alternative telecommunications regulation and broadband deployment. As a result of Act 183, the reporting requirements for the PUC jurisdictional telecommunications companies of Pennsylvania have been streamlined at 3015 (e) of the Public Utility Code. A quarterly earnings report is not listed among those reports now required of PUC jurisdictional telecommunications utilities in Pennsylvania and, therefore, this report does not address telephone company earnings.

The reports have been filed for the period ended June 30, 20131. The Finance Staff of the Bureau of Technical Utility Services has reviewed the reports and has prepared this summary report for public release. This Report sets forth the achieved return on equity for each company, the last allowed return for that utility, a market return as determined through the analysis of the barometer group data and the most recent returns allowed, per industry, by the Pennsylvania Public Utility Commission and by other regulatory bodies. Where a utility has not filed a report, the reasons for not filing are indicated.

Questions pertaining to the preparation and contents of this Report should be directed to Ms. Erin Laudenslager, Manager - Finance, Bureau of Technical Utility Services, at (717) 705-4364.

1 Peoples TWP, LLC, Pennsylvania American Water Company, The York Water Company, and Duquesne Light Company had a pending rate filing at Docket Nos. R-2013-2355886, R-2013-2355276, R-2012-2336379, and R-2013-2372129 respectively, and filed a letter with the Secretary in place of a report in accordance with 52 Pa. Code § 71.4.

6

Attachment A

The equity return summaries that follow in Attachment A are, for each quarter;

ACTUAL1. Based on actual results of operations

and

ADJUSTED2. Based on company proposed pro forma and ratemaking adjustments

7

Attachment A

ELECTRIC UTILITIESEQUITY RETURNS BY QUARTER

QTREND

Peco PPL Duq W Penn PaPwr UGI Penelec MetEdACT ADJ ACT ADJ ACT ADJ ACT ADJ ACT ADJ ACT ADJ ACT ADJ ACT ADJ

2008 1 12.74 10.97 6.68 6.68 8.00 8.00 4.06 4.06 4.69 4.69 10.73 7.15 13.77 13.77 9.05 9.052 10.90 9.15 7.17 7.17 8.80 8.80 3.70 3.70 7.07 5.54 12.33 8.81 14.03 13.29 9.25 8.633 9.68 8.38 7.44 7.44 8.12 8.12 3.48 3.48 6.35 4.78 9.08 8.17 12.56 11.78 8.48 7.824 10.39 8.82 9.06 8.75 10.52 10.34 4.20 4.25 8.67 7.09 8.63 8.65 15.07 14.25 9.20 8.50

2009 1 10.84 8.84 10.00 10.00 10.90 10.90 5.20 5.20 10.02 8.76 7.55 7.55 6.39 5.83 5.22 4.692 11.44 9.82 11.04 11.04 9.67 9.67 7.04 7.04 11.84 10.64 3.42 8.30 8.01 7.67 7.20 6.933 11.27 10.36 10.47 10.47 9.05 9.05 8.26 8.26 10.17 8.49 6.96 9.05 10.34 9.51 9.74 8.634 11.58 7.70 9.20 9.20 8.58 8.40 10.24 8.93 8.03 11.15 9.71 9.21 4.23 3.36

2010 1 7.48 7.48 6.69 6.69 12.66 11.19 10.17 11.70 10.43 9.96 4.71 3.772 6.41 6.41 12.28 10.19 13.41 11.89 8.04 6.97 5.89 4.473 6.63 6.63 12.19 10.23 12.46 11.97 8.37 7.32 8.24 6.834 14.35 9.61 7.91 6.98 4.78 4.80 6.88 4.69 12.95 11.55 9.11 8.10 6.12 4.86

2011 1 11.74 11.34 8.31 8.31 8.43 6.80 10.90 8.55 13.46 13.47 9.57 8.62 10.56 9.212 12.25 11.03 9.41 9.41 10.86 10.39 10.05 8.40 7.41 5.81 14.11 12.94 6.51 6.38 7.68 6.433 10.35 11.07 8.89 8.89 10.05 9.58 12.95 11.21 11.67 10.05 14.84 12.93 8.73 8.18 9.90 7.504 13.41 11.38 10.21 9.97 13.33 11.58 5.91 7.60 14.60 9.79 6.45 8.43 4.24 5.23

2012 1 12.89 11.26 10.95 10.71 11.66 13.16 5.78 7.02 15.04 8.42 5.76 7.54 3.90 4.642 12.63 12.01 10.81 10.42 10.61 9.15 8.95 8.95 14.61 8.53 6.48 8.08 3.44 4.013 13.14 12.66 10.33 9.92 10.63 10.45 9.69 9.54 15.85 9.48 7.34 8.58 5.72 6.284 11.55 11.56 6.02 4.88 10.27 9.24 9.54 9.54 8.41 8.27 14.60 8.98 5.41 7.74 5.39 6.81

2013 1 11.92 11.27 7.56 6.24 10.12 9.74 9.23 9.23 8.89 8.74 12.77 9.84 5.30 7.67 5.01 6.472 11.40 10.74 7.80 7.37 12.34 12.34 8.85 8.70 11.53 10.49 5.86 8.21 5.36 6.79

8

Attachment A

GAS UTILITIESEQUITY RETURNS BY QUARTER

QTR Columbia Peoples PECO UGI Equitable NFG UGI Penn Peoples TWPEND ACT ADJ ACT ADJ ACT ADJ ACT ADJ ACT ADJ ACT ADJ ACT ADJ ACT ADJ

2008 1 18.51 11.28 15.69 11.51 -2.02 0.69 16.50 12.29 7.71 6.19 7.69 6.502 19.13 11.99 14.58 10.93 15.70 12.09 6.09 5.25 6.94 6.413 20.52 11.68 2.30 2.74 12.70 9.81 15.60 11.58 3.99 4.46 5.07 5.094 5.52 10.71 18.96 9.00 2.48 2.43 12.62 11.01 16.42 11.22 4.94 3.84

2009 1 9.85 11.05 16.74 8.14 5.82 9.06 13.92 9.88 5.89 9.51 15.64 9.79 - - 4.98 3.272 11.45 10.61 16.51 9.72 7.62 9.64 13.26 10.50 7.21 9.73 14.35 8.79 4.30 2.963 10.97 9.17 20.06 7.84 8.95 10.59 6.96 9.05 8.40 10.13 14.74 12.48 2.21 8.31 4.97 3.154 14.80 6.47 10.66 9.28 14.58 11.41 9.84 9.86 14.74 12.48 4.11 8.58 3.75 3.65

2010 1 15.91 11.69 10.31 9.18 18.80 10.46 7.84 8.772 9.65 5.25 15.97 11.48 9.47 8.99 19.13 10.33 8.86 7.953 14.84 11.79 8.87 8.56 18.19 10.99 8.62 9.03

4 12.50 7.67 10.21 9.94 16.52 11.88 8.78 8.67 18.97 11.29 9.57 10.12 3.27 9.572011 1 11.74 11.34 19.61 13.11 9.48 9.78 19.87 12.11 13.08 12.17 6.52 9.06

2 11.97 10.79 19.67 13.92 10.81 10.71 20.83 12.97 14.08 12.65 6.10 6.943 5.67 8.47 12.56 11.15 18.24 11.98 10.40 9.93 21.16 13.05 14.32 11.48 5.78 6.674 11.69 12.06 16.55 9.18 7.99 8.89 19.62 12.34 14.01 9.35 6.75 5.56

2012 1 8.65 11.24 8.98 12.09 15.71 8.95 2.29 8.05 15.76 10.51 13.22 9.63 5.24 3.392 9.00 10.17 8.72 12.03 13.60 9.90 5.51 7.51 14.10 10.06 13.63 10.40 4.57 6.433 9.27 8.88 6.21 9.35 9.98 13.48 13.79 10.05 5.84 7.79 13.88 10.39 13.16 10.66 7.02 7.414 11.24 9.57 12.42 15.10 13.68 9.44 7.27 8.05 15.11 10.17 13.31 10.63 5.05 6.94

2013 1 12.49 9.89 14.63 15.13 14.65 10.27 12.42 8.40 19.33 10.25 13.28 10.582 10.85 7.15 16.59 8.35 14.43 14.40 13.02 10.21 10.40 8.92 20.18 10.25 10.98 10.27

9

Attachment AWATER UTILITIES

EQUITY RETURNS BY QUARTER

QTR PAWC AQUA United York SuperiorEND ACT ADJ ACT ADJ ACT ADJ ACT ADJ ACT ADJ

2008 1 8.06 8.06 7.51 8.82 9.20 7.202 7.99 7.99 10.53 10.97 8.70 6.70 6.74 8.013 8.65 8.65 11.09 10.51 8.70 6.00 10.60 8.254 8.85 9.43 10.87 10.44 7.15 8.40 8.20 10.00

2009 1 11.45 10.78 8.80 9.60 7.28 8.402 11.69 10.71 9.20 9.30 6.50 7.713 5.70 6.93 9.20 8.604 5.66 5.84 8.80 9.00

2010 1 8.72 8.10 5.74 6.57 8.90 8.702 9.30 9.30 6.59 7.543 9.58 9.58 10.19 10.35 7.15 8.344 9.18 8.52 10.10 8.94 4.66 8.69 10.4 11.2

2011 1 10.68 8.32 5.02 8.81 10.8 11.12 10.92 7.93 4.72 8.61 11.1 10.23 3.92 7.69 10.9 10.24 7.69 8.00 10.8 10.0

2012 1 8.98 8.98 7.38 7.84 10.7 9.52 9.06 9.06 7.30 7.65 10.4 9.43 9.17 9.17 9.50 7.77 7.96 8.38 10.5 9.14 9.54 9.04 12.41 12.56 8.33 8.49 10.4 9.1

2013 1 13.24 11.96 8.53 8.712 14.26 12.52 8.99 9.15 8.57 7.85

10

Attachment B

Attachment B includes:

A. Overall Returns on rate base1. Actual

2. Company proposed pro forma and ratemaking adjustments

and

B. Equity Returns1. Actual

2. Company proposed pro forma and ratemaking adjustments

11

* Peoples TWP, LLC, Pennsylvania American Water Company, The York Water Company, and Duquesne Light Company had a pending rate filing at Docket Nos. R-2013-2355886, R-2013-2355276, R-2012-2336379, and R-2013-2372129 respectively, and filed a letter with the Secretary in place of a report in accordance with 52 Pa. Code § 71.4.

12

Attachment B1 of 2

Summary of Returnsfor the Year Ended June 30, 2013

OVERALL RETURN EQUITY RETURN ROE YEARCOMPANY NAME ACTUAL ADJ ACTUAL ADJ AUTH AUTH

ELECTRIC$10,000,000 RevenuesPECO Energy 8.61 8.24 11.40 10.74 Settled 2010PPL Electric Utilities Corp. 6.63 6.39 7.80 7.37 10.40 2012Duquesne Light Company* Settled 2007West Penn Power Company 8.89 8.89 12.34 12.34 11.50 1995Pennsylvania Power Company 7.80 7.70 8.85 8.70 12.91 1988UGI Utilities, Inc. 9.46 8.40 11.53 10.49 10.58 1996Pennsylvania Electric Company 6.30 7.36 5.86 8.21 10.10 2007Metropolitan Edison Company 5.37 6.06 5.36 6.79 10.10 2007GAS$10,000,000 RevenuesColumbia Gas of PA, Inc. 8.41 6.51 10.85 7.15 Settled 2013Peoples Natl Gas LLC 11.33 6.71 16.59 8.35 Settled 2012PECO Energy 10.41 10.40 14.43 14.40 Settled 2010UGI Utilities, Inc. 10.36 8.24 13.02 10.21 Settled 1995Equitable Gas Company 7.85 7.01 10.40 8.92 Settled 1991National Fuel Gas Distribution Co. 13.18 7.62 20.18 10.25 Settled 2006UGI Penn Natural Gas, Inc. 8.87 8.28 10.98 10.27 Settled 2007Peoples TWP, LLC* Settled 2006UGI Central Penn Gas, Inc. 10.76 9.93 14.33 13.22 10.40 2007WATER10,000,000 RevenuesPA American Water Company* Settled 2011AQUA Pennsylvania 10.20 9.25 14.26 12.52 Settled 2012York Water Company* Settled 2008United Water Penna. Inc. 7.63 7.72 8.99 9.15 Settled 2009Superior Water Company 6.96 6.69 8.57 7.85 Settled 2011

Attachment B2 of 2

Columbia Gas of Pennsylvania, Inc.

Return on equity adjusted from 10.85% to 7.15% based on the following company adjustments to actual results of operations.

1. $ (4,546,000) Decrease in Operating Revenue2. $ 5,785,000 Annualization of Rider USP Expense3. $ 4,088,000 Annualization of Pension Expense4. $ 24,529,000 Federal Income Tax Adjustment

Peoples Natural Gas Company

Return on equity adjusted from 16.59% to 8.35% based on the following company adjustments to actual results of operations.

1. $ 79,605,000 Rate Base Increase Plant Normalization2. $ 29,019,000 Rate Base Increase in Deferred Taxes3. $ (30,640,000) Normalization of Operating Revenue4. $ (15,513,000) Normalization of Operating Expense5. $ 9,432,000 Normalization of O&M Expense6. $ 9,077,000 Normalization of Income Taxes

National Fuel Gas Distribution Corporation

Return on equity adjusted from 20.18% to 10.25% based on the following company adjustments to actual results of operations

1. $ 29,302,000 Rate Base Increase in Plant2. $ 37,739,000 Rate Base Cash Working Capital Increase3. $ 10,111,000 Decrease in Operating Revenue

13

Attachment C

ALLOWED RATES OF RETURN ON COMMON EQUITY This is a historical chart that shows the most recent fully litigated rate cases for select companies in electric, gas, and water. A docket number followed by their final return on equity and year is also given.

ELECTRIC Docket Number ROE (%) Year

Recent PA PUC AllowedPPL Electric Utilities Corp. R-2012-2290597 10.40 2012PECO Energy Company R-2010-2161575 Settled 2010West Penn Power Company R-00942986 11.50 1995UGI - Electric R-00932862 10.58 1996Pennsylvania Electric Company R-00061367 10.10 2007Metropolitan Edison Company R-00061366 10.10 2007

Current Market Indicated ROE as calculated by the 8.06-10.97Bureau of Technical Utility Services.

GAS

Recent PA PUC AllowedColumbia Gas of Pa. R-2012-2321748 Settled 2013UGI Utilities, Inc. – Gas R-00953297 Settled 1995Peoples Natural Gas Co. R-2012-2285985 Settled 2012UGI Central Penn Gas R-00061398 10.40 2007PECO Energy R-2010-2161592 Settled 2010

Current Market Indicated ROE as calculated by the 7.89-9.04Bureau of Technical Utility Services.

WATER

Recent PA PUC AllowedAqua Pennsylvania R-2011-2267958 Settled 2012Penna American Water Co. R-2011-2232243 Settled 2011

Current Market Indicated ROE as calculated by the 8.73-11.20Bureau of Technical Utility Services.

14

Attachment D

The market indicated common equity cost rate range consists of data used from the barometer groups and is based on a series of calculations to average the DCF methods.

Electric Company Barometer GroupCost Rates

%

(1) Current DCF 9.08

(2) 52-Week Average DCF 9.04

(3) Overall DCF (1) + (2) / 2 9.06

(4) Market Indicated Common Equity Cost Rate Range 7.69-10.43 @ 1 standard deviation around the mean.²

(5) CAPM Check of DCF Reasonableness 8.98

(6) Recent Commission Approved ROEs:10.28

(7) Distribution System Improvement Charge (DSIC) Return 10.20%

Barometer Group CompaniesConsolidated EdisonDominion Resources PPL CorporationPublic Service Enterprise GroupPepco HoldingsUIL Holdings

of the Bureau of Technical Utility Services at (717) 783-5392.

1 As calculated by the Bureau of Technical Utility Services2 Standard Deviation of 12 DCF observations

Market Based Returns on Common Equity (1)October 7, 2013

PPL Electric Utilities, R-2012-2290597³

3 ROEs from base rate cases within last two years, fully litigated or stipulated for DSIC purposes

Any questions concerning DSIC should be directed to Andrew Herster

15

Attachment D

Barometer water companies are used to calculate a current DCF in the first chart. The second chart demonstrates the companies 52 week average DCF. A final average of the two calculations is also shown at the bottom.

Closing Latest Ind. Div.Market Indicated Plus 1/2 Current

Price (Po) Dividend Div. Growth Dividend10/4/2013 Do Rate (D1) Yield(D1/Po) DCF

($) ($) ($) (%) (%)Consolidated Edison 54.51 2.46 2.48 4.55 6.74Dominion Resources 62.22 2.25 2.31 3.72 9.66PPL Corporation 30.13 1.47 1.48 4.93 9.13Public Service Enterprise Group 39.92 1.44 1.45 3.64 8.24Pepco Holdings 18.28 1.08 1.09 5.94 10.74UIL Holdings 36.97 1.73 1.73 4.68 10.18Group Average D1/Po 4.58Group Average G 4.50DCF 9.08

Latest AverageIndicated Dividend

High Low Average (Pa) Dividend (Do) Yield (Do/Pa) DCF($) ($) ($) ($) (%) (%)

Consolidated Edison 64.03 53.63 58.83 2.46 4.18 6.38Dominion Resources 64.04 48.94 56.49 2.25 3.98 9.93PPL Corporation 33.55 27.74 30.65 1.47 4.80 9.00Public Service Enterprise Group 37.00 29.05 33.03 1.44 4.36 8.96Pepco Holdings 22.72 18.04 20.38 1.08 5.30 10.10UIL Holdings 42.14 32.33 37.24 1.73 4.65 10.15Group Average Do / Pa 4.54Group Average G 4.50DCF 9.04

Average of Current and 52-Week 9.06

Electric Company Barometer GroupCalculation of a Current Dividend Yield

Electric Company Barometer Group52-week Average Dividend Yield Calculation

16

Attachment D

Multiple sources of the Barometer companies projected 5 year Earnings Per Share are used to calculate the Group Average Dividend Growth Estimate.

AvgerageValue Line Value Line Zack's Yahoo Morningstar Earnings Growth

DPS EPS EPS EPS EPS Growth Estimate(%) (%) (%) (%) (%) (%) (%)

Consolidated Edison 1.50 2.50 3.30 1.78 1.20 2.20 2.20Dominion Resources 5.50 5.00 5.80 7.03 10.00 6.96 5.94PPL Corporation 2.00 -2.90 -0.27 4.20 0.34 4.20Public Service Enterprise Group 2.00 -0.50 0.70 -2.11 8.50 1.65 4.60Pepco Holdings 1.00 6.00 4.90 3.82 4.50 4.91 4.81UIL Holdings 4.00 8.00 7.41 7.00 6.60 5.50Group Average 2.40 3.40 3.30 2.94 5.90 3.89 4.54 USE 4.50

Sources:

Development of a Representative Dividend Growth Rate for the Barometer Group of Six Electric Companies

5 Year Forecast

Yahoo!, October 7, 2013 (http://finance.yahoo.com/)Zacks, October 7, 2013 (www.zacks.com)Value Line Investment Survey, October 7, 2013Morningstar, October 7, 2013 (http://financials.morningstar.com)

17

Company

Consolidated Edison

Dominion Resources

PPL Corporation

Public Service Enterprise Group

PEPCO Holdings, Inc.

UIL Holdings

Average

Range of Reasonable Equity Ratios

50.00%

44.50%

57.50%

Common Equity Ratios of Electric Utility Barometer Groups (2)

2013 Common Equity Ratio (1)

53.00%

41.50%

(1) Source: Value Line Investment Survey October 7, 2013(2) The common equity ratios reported by Value Line exclude short-term debt and current maturities of long-term debt.

45.50%

48.67%

41.50-57.50%

Attachment D

The Common Equity Ratios of Electric Utility Barometer Companies table depicts each company’s quarterly common equity ratio. The range of Reasonable Equity Ratios consists of the lowest and highest common equity ratio for the barometer group companies.

18

Attachment D

The Capital Structure and Cost of Debt and Preferred Stock table shows the Schedule E and Schedule F of each company’s quarterly earnings report.

PPL Electric Duquesne Light UGI Utilities West Penn PECO Electric Metropolitan Edison PA Electric PA PowerCompany Inc. Power Co. Company Company Company

Schedule ETotal Debt 49.38% 41.98% 47.98% 43.53% 52.18% 55.26% 39.02%

Total Preferred & Preference Stock 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

Total Common Equity 50.62% 58.02% 52.02% 56.47% 47.82% 44.74% 60.98%

Schedule FCost of Debt 5.39% 2.54% 5.14% 4.95% 5.29% 5.69% 6.40%

Cost of Preferred Stock 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

1) Source: Company supplied quarterly earnings report, Schedules E & F

Capital Structure and Cost of Debt and Preferred Stock for Pennsylvania Electrics - Twelve months ended June 30, 2013 1)

19

Attachment E

The market indicated common equity cost rate range consists of data used from the barometer groups and is based on a series of calculations to average the DCF methods.

Cost Rates%

(1) Current DCF 8.58

(2) 52-Week Average DCF 8.53

(3) Overall DCF (1) + (2) / 2 8.56

(8) Market Indicated Common Equity Cost Rate Range @ 1 standard deviation around the mean.2 8.12-8.99

(5) CAPM Check of DCF Reasonableness 8.83

(6) Recent Commission Approved ROEs3:None within last two years

(7) Distribution System Improvement Charge Return 10.10%

Barometer Group CompaniesAGL Resources, Inc.New Jersey Resources Northwest Natural Gas CompanyPiedmont Natural Gas CompanySouth Jersey IndustriesWGL Holdings

Market Based Returns on Common Equity (1)

Gas Distribution Company Barometer Group

October 7, 2013

Any questions concerning DSIC should be directed to Andrew Herster of the Bureau of Technical Utility Services at (717) 783-5392.

1 As calculated by the Bureau of Technical Utility Services2 Standard Deviation of 12 DCF observations3 ROEs from base rate cases within last two years, fully litigated or stipulated for DSIC purposes

20

Attachment E

Barometer water companies are used to calculate a current DCF in the first chart. The second chart demonstrates the companies 52 week average DCF. A final average of the two calculations is also shown at the bottom.

Closing Latest Ind. Div.Market Indicated Plus 1/2 Current

Price (Po) Dividend Div. Growth Dividend10/4/2013 Do Rate (D1) Yield(D1/Po) DCF

($) ($) ($) (%) (%)AGL Resources 45.12 1.88 1.92 4.26 8.26New Jersey Resources 43.20 1.68 1.71 3.95 7.95Northwest Natural Gas 41.45 1.82 1.84 4.45 8.61Piedmont Natural Gas 31.89 1.24 1.26 3.95 8.60South Jersey Industries 57.33 1.77 1.85 3.22 9.22WGL Holdings 41.85 1.68 1.71 4.07 8.76

Group Average D1 / Po 3.98Group Average G 4.60DCF 8.58

Latest AverageIndicated Dividend

High Low Average (Pa) Dividend (Do) Yield (Do/Pa) DCF($) ($) ($) ($) (%) (%)

AGL Resources 47.00 36.90 41.95 1.88 4.48 8.48New Jersey Resources 47.60 38.51 43.06 1.68 3.90 7.90Northwest Natural Gas 50.80 39.96 45.38 1.82 4.01 8.18Piedmont Natural Gas 35.53 28.51 32.02 1.24 3.87 8.52South Jersey Industries 62.28 45.81 54.05 1.77 3.28 9.28WGL Holdings 46.96 35.96 41.46 1.68 4.05 8.74

Group Average Do / Pa 3.93Group Average G 4.60DCF 8.53

Average of Current and 52-Week 8.56

Gas Company Barometer Group52-week Average Dividend Yield Calculation

Gas Company Barometer GroupCalculation of a Current Dividend Yield

21

Attachment E

Multiple sources of the Barometer companies projected 5 year Earnings Per Share are used to calculate the Group Average Dividend Growth Estimate.

AvgerageValue Line Value Line Zack's Yahoo Morningstar Earnings Growth

DPS EPS EPS EPS EPS Growth Estimate

(%) (%) (%) (%) (%) (%) (%)

AGL Resources 4.50 9.00 4.00 6.60 6.53 4.00New Jersey Resources 3.00 4.00 4.00 2.50 2.70 3.30 4.00Northwest Natural Gas 2.50 4.50 4.00 4.00 3.00 3.88 4.17Piedmont Natural Gas 3.00 4.00 5.00 5.00 4.60 4.65 4.65South Jersey Industries 8.50 7.50 6.00 6.00 6.00 6.38 6.00WGL Holdings 3.00 3.50 5.30 5.25 2.50 4.14 4.68

Group Average 4.08 5.42 4.72 4.55 4.23 4.81 4.58 USE 4.60

Sources: Morningstar, October 7, 2013 (http://financials.morningstar.com)Value Line Investment Survey, October 7, 2013Zacks, October 7, 2013 (www.zacks.com)Yahoo!, October 7, 2013 (http://finance.yahoo.com/)

Development of a Representative Dividend Growth Rate for the Barometer Group of Gas Companies

5 Yr Forecast

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Attachment F

The market indicated common equity cost rate range consists of data used from the barometer groups and is based on a series of calculations to average the DCF methods.

Water Company Barometer GroupCost Rates

%

(1) Current DCF 9.38

(2) 52-Week Average DCF 9.38

(3) Average DCF 9.38

(4) Market Indicated Common Equity Cost Rate Range 8.23-10.53 @ 1 standard deviation around the mean.2

(5) CAPM Check of DCF Reasonableness 9.06

(6) Recent Commission Approved ROEs3: 10.20

(6) Distribution System Improvement Charge Return 10.10%

Barometer Group Companies

American States Water CompanyConnecticut Water Service, Inc.Middlesex Water CompanyCalifornia Water Service GroupSJW CorporationAqua America , Inc.American Water Works Co., Inc.

Aqua Pennsylvania, R-2011-2267958, ROE for DSIC Purposes Only

Market Based Returns on Common Equity ¹October 7, 2013

of the Bureau of Technical Utility Services at (717) 783-5392.

3 ROEs from base rate cases within last two years, fully litigated or stipulated for DSIC purposes

1 As calculated by the Bureau of Technical Utility Services2 Standard Deviation of 14 DCF observations

Any questions concerning DSIC should be directed to Andrew Herster

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Attachment F

Barometer water companies are used to calculate a current DCF in the first chart. The second chart demonstrates the companies 52 week average DCF. A final average of the two calculations is also

shown at the bottom.

Closing Latest Ind. Div.Market Indicated Plus 1/2 Current

Price (Po) Dividend Div. Growth Dividend

10/4/2013 Do Rate (D1) Yield(D1/Po) Growth DCF($) ($) ($) (%) (%) (%)

American States Water Company 27.06 0.81 0.84 3.11 5.00 8.11Connecticut Water Service, Inc. 31.09 0.99 1.01 3.25 6.08 9.33Middlesex Water Company 20.60 0.75 0.76 3.67 4.00 7.67California Water Service Group 19.95 0.64 0.66 3.30 6.69 9.99SJW Corporation 27.39 0.73 0.75 2.73 7.50 10.23Aqua America, Inc. 24.39 0.61 0.64 2.63 6.87 9.50American Water Works Co., Inc. 40.58 1.12 1.17 2.88 8.23 11.12

Group Average D1/Po 3.08 9.42Group Average G 6.30DCF 9.38

Latest AverageIndicated Dividend

High Low Average (Pa) Dividend (Do) Yield (Do/Pa) Growth DCF($) ($) ($) ($) (%) (%) (%)

American States Water Company 33.09 20.32 26.71 0.81 3.03 5.00 8.03Connecticut Water Service, Inc. 32.45 27.75 30.10 0.99 3.29 6.08 9.37Middlesex Water Company 22.46 17.48 19.97 0.75 3.76 4.00 7.76California Water Service Group 22.34 16.84 19.59 0.64 3.27 6.69 9.95SJW Corporation 28.88 22.56 25.72 0.73 2.84 7.50 10.34Aqua America , Inc. 28.12 19.32 23.72 0.61 2.57 6.87 9.44American Water Works Co., Inc. 43.72 35.95 39.84 1.12 2.81 8.23 11.04

Group Average Do / Pa 3.08 9.42Group Average G 6.30DCF 9.38

9.38Average of Current and 52-Week

Calculation of a Current Dividend Yield

52-week High-Low Dividend Yield Calculation

24

Attachment F

Multiple sources of the Barometer companies projected 5 year Earnings Per Share are used to calculate the Group Average Dividend Growth Estimate.

AvgerageValue Line Value Line Zacks Yahoo Reuters Earnings Growth

DPS EPS EPS EPS EPS Growth Estimate

(%) (%) (%) (%) (%) (%) (%)

American States Water Company 8.00 5.00 2.00 2.00 12.57 5.39 5.00Connecticut Water Service, Inc. 4.00 6.50 5.00 5.00 7.81 6.08 6.08Middlesex Water Company 1.50 4.00 2.70 0.37 2.36 4.00California Water Service Group 6.00 5.50 6.00 6.00 9.24 6.69 6.69SJW Corporation 4.50 7.50 14.00 2.61 8.04 7.50Aqua America, Inc. 10.50 9.50 5.30 5.80 13.09 8.42 6.87American Water Works Co., Inc. 9.00 10.00 7.20 7.50 8.23 8.23

Group Average 6.21 6.86 5.10 6.14 7.62 6.46 6.34 USE 6.30

Sources:

5 Yr Forecast

Development of a Representative Dividend Growth Rate for the Barometer Group of Water Companies

Reuters, October 7, 2013 (http://reuters.com)Value Line Investment Survey, October 7, 2013Zacks, October 7, 2013 (www.zacks.com)Yahoo!, October 7, 2013 (http://finance.yahoo.com/)

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