STATE OF NEW JERSEY BOARD OF PUBLIC UTILITIES

Transcription

1 ATTACHMENT 1 STATE OF NEW JERSEY BOARD OF PUBLIC UTILITIES IN THE MATTER OF THE PETITION OF PUBLIC SERVICE ELECTRIC AND GAS COMPANY FOR APPROVAL OF ITS ENERGY EFFICIENCY 2017 PROGRAM AND RECOVERY OF ASSOCIATED COSTS ( EE 2017 Program ) BPU Docket No. PUBLIC SERVICE ELECTRIC AND GAS COMPANY DIRECT TESTIMONY OF M. COURTNEY MCCORMICK VICE PRESIDENT RENEWABLES & ENERGY SOLUTIONS MARCH 3, 2017

2 TABLE OF CONTENTS I. SCOPE OF TESTIMONY... 1 II. PROGRAM OVERVIEW... 3 III. LEVEL OF INVESTMENT AND PROGRAM TERM... 8 IV. SUB-PROGRAM DESCRIPTIONS... 9 V. AMORTIZATION PERIOD VI. CREDITS, BUDGETS AND ADMINISTRATIVE COSTS VII. PROGRAM EVALUATION AND REPORTING VIII. CONCLUSION SCHEDULE INDEX

3 PUBLIC SERVICE ELECTRIC AND GAS COMPANY DIRECT TESTIMONY OF M. COURTNEY MCCORMICK Q. Please state your name and professional title. A. My name is M. Courtney McCormick and I am the Vice President of Renewables & Energy Solutions at Public Service Electric and Gas Company (PSE&G, the Company). My credentials are set forth in the attached Schedule MCM-EE I. SCOPE OF TESTIMONY Q. Please summarize your testimony. A. I am testifying in support of the Company s proposal to extend funding for three current PSE&G energy efficiency sub-program offerings, and provide new residential energy efficiency offerings (collectively, the Energy Efficiency 2017 Program, or EE 2017). The extensions to the three current PSE&G energy efficiency sub-program offerings, or subprograms, benefit the following entities located within PSE&G s service territory: New Jersey hospital owners and patients, residential multifamily housing owners and tenants, and government, non-profit and small businesses located in urban enterprise zones (UEZs). The current sub-programs (Direct Install, Hospital Efficiency, and Residential Multifamily Housing) were part of the original PSE&G Energy Efficiency Economic Stimulus Program (EEE Program), approved in 2009, were extended in the Energy Efficiency Economic Extension Program (EEE Extension Program), approved in 2011, and were subsequently extended in the Energy Efficiency Economic Extension II Program (EEE Extension II Program), approved in April 2015 in BPU Docket No. EO

4 In addition to these existing sub-programs, PSE&G is proposing two additional sub-programs. The first sub-program advances a residential smart thermostat energy efficiency solution in New Jersey that can help reduce energy bills, while providing energy insights to our residential customers. This Smart Thermostat Sub-Program will make internet-connected smart thermostats available to our customers at a low monthly fee with on-bill repayment. These thermostats will not only generate energy savings, but may also support future clean energy efforts and utility operations. Second, PSE&G proposes a Residential Data Analytics Pilot Sub-Program that provides customers with energy bill insights and recommends specific actions and measures that can easily be implemented to reduce the customer s energy bill. Similar programs are currently being administered by electric and gas utility companies around the country and in New Jersey, including New Jersey Natural Gas and South Jersey Gas Q. Can you provide a summary of your testimony? A. My testimony includes an overview of the proposed EE 2017 Program and a description of each of the five sub-programs. Minimum Filing Requirements (MFRs) are presented both in my testimony and in Schedule MCM-EE17-2. The electronic version of this filing contains the EE 2017 Program assumptions, including investments, costs, number of expected participants, and impacts. This information is located in the electronic workpapers labeled WP-MCM-EE17-1.xlsx, WP-MCM-EE17-2A.xlsx, WP-MCM-EE17-2B.xlsx, and WP-MCM-EE17-2C.xlsx.

5 Q. Has PSE&G filed other testimony in this case? A. Yes, Mr. Stephen Swetz has filed testimony addressing revenue requirements, cost recovery, and rate impacts. 4 II. PROGRAM OVERVIEW Q. Please describe the EE 2017 Program. A. PSE&G is proposing to commit up to $74 million in direct investment to support an extension of its existing three energy efficiency sub-programs (Direct Install, Hospital Efficiency, and Residential Multifamily Housing), and two innovative smart homes energy efficiency sub-programs (Smart Thermostats and Data Analytics Pilot). In total, these subprograms are expected to reduce energy consumption by approximately 816 million kwh and 90 million therms, and reduce customers energy bills by $237 million. To date, PSE&G s BPU-approved energy efficiency programs have enabled hospitals, multifamily buildings, small businesses, government and non-profit entities to affordably invest in energy efficiency through the installation of cost effective energy conservation measures (ECMs) that reduce customer energy bills, increase comfort, and help the environment while creating jobs and supporting the State s Energy Master Plan goals. These sub-programs have been successful and have resulted in estimated customer bill savings of more than $30 million annually, and saved enough electricity to power 24,000 homes, and gas to supply almost 6,000 homes annually. Furthermore, these sub-programs have received national recognition from various organizations, including the American Council for an Energy-Efficient Economy (ACEEE), the Alliance to Save Energy, the

6 Association of Energy Services Professionals (AESP), and the New Jersey Association of Energy Engineers (NJAEE), and also received the New Jersey Biz Healthcare Heroes Award. PSE&G is proposing to continue these highly successful sub-programs, and additionally provide two cost-effective residential energy efficiency offerings. Specifically, the Company is requesting that the Board approve the following five sub-programs: 1) Direct Install; 2) Hospital Efficiency; 3) Residential Multifamily Housing; 4) Smart Thermostats; and 5) Residential Data Analytics Pilot. PSE&G proposes that customers participating in the EE 2017 Program would not be eligible for additional incentives for the same measures that have or will receive incentives under the New Jersey Clean Energy Program (NJCEP) unless otherwise specified in this testimony or approved by the BPU Q. Please explain the basis for estimated energy savings. A. For the first three sub-programs (Direct Install, Hospital Efficiency, and Residential Multifamily), PSE&G developed estimates for energy savings based on data collected from completed projects in these sub-programs. PSE&G tracks costs and savings for all projects down to the ECM level, and has compiled a significant base of historical data. In addition, an impact evaluation study conducted by the Cadmus Group for the PSE&G EEE Extension Program was completed in May This study affirmed the accuracy of the energy savings reported for the Direct Install, Hospital Efficiency and Residential Multifamily Sub- 20 Programs from PSE&G s EEE Extension Program. Specifically, the Cadmus report (Schedule MCM-EE17-12) noted: Overall, PSE&G [EEE Extension] Program demonstrated strong performance in estimating and achieving energy savings at customer facilities.

7 Accordingly, actual and verified energy savings achieved to date has informed the estimated energy savings set forth in this filing for these three sub-programs. For the two new sub-programs energy savings estimates are informed by a variety of relevant data sources. Energy savings for the Smart Thermostat Sub-Program is estimated to be 16% of a customer s cooling load, and 13% of a customer s heating load. This estimate is based upon studies from a variety of sources, including the USDOE, EnerNOC, Cadmus, various thermostat vendors and other utilities. Energy savings for the Data Analytics Sub-Program is estimated to be 1.5% of household consumption of electricity and gas. Similar pilot programs around the country have achieved aggregate energy savings of between 1.5% and 2.5% Q. Please describe the three sub-programs that will be continued under the EE 2017 Program. A. The first three sub-programs (Direct Install, Hospital Efficiency, and Residential Multifamily Housing) are extensions of the existing sub-programs that were approved as part of EEE Extension II in 2015, with minimal sub-program changes. These existing subprograms are forecasted to be fully committed during calendar year Customer demand for all three sub-programs continues to be strong, and numerous potential upgrades have been identified for new projects that cannot be funded within the current sub-program budgets. To ensure that these sub-programs are able to operate without interruption, PSE&G is proposing to commit up to $60 million in direct investment over a period of approximately two years to support an extension of these three sub-programs. Combined, PSE&G estimates that this 1 Cadmus, Long Run Savings and Cost-Effectiveness of Home Energy Report Programs, Winter 2014/2015, available at

8 investment will provide energy savings of approximately 638 million kwhs and 48 million therms over the life of the measures. See Schedule MCM-EE17-8. It is expected that these three sub-programs will also reduce customers energy bills by approximately $160 million Q. Please describe the Smart Thermostat Sub-Program. A. The fourth sub-program, the Smart Thermostat Sub-Program, is an offering for residential customers. This sub-program is designed to encourage the adoption of smart thermostats which provide cost-effective energy savings by programming themselves to maximize energy savings while maintaining the customer s comfort. While smart thermostats provide cost effective energy savings, there are several barriers to entry that restrict market penetration in New Jersey, including high upfront cost, the need for installation services, and lack of customer knowledge. The Smart Thermostat Sub-Program is designed to address those market barriers by offering a low monthly price and optional professional installation services to customers, and an educational campaign to increase customer awareness of the benefits of smart thermostats, and thereby increase market penetration and reduce overall customer energy bills. The sub-program will also include a pilot offering for the lower income and multifamily sectors. This limited pilot will analyze customer satisfaction, Wi-Fi connectivity issues, and other issues that restrict access to smart thermostats. A better understanding of the market dynamics in these customer segments will enable PSE&G and other utility companies to provide optimally designed program offerings for these markets in the future and provide true universal service of this cost effective ECM.

9 Q. Does the Smart Thermostat Sub-Program include targeted segments? A. Yes. The general Smart Thermostat Sub-Program will primarily target single family residential customers with thermostat-controlled heating and/or cooling. In addition, as part of this sub-program, PSE&G will include a targeted smart thermostat pilot for lower income and multifamily sectors, to help identify any additional barriers to entry in those specific market segments Q. What is the proposed investment in the Smart Thermostat Sub-Program? A. PSE&G is proposing to commit up to $11.5 million in direct investment towards this sub-program. The Company estimates that this investment will provide energy savings of 135 million kwhs and 37 million therms over the life of the measures. See Schedule MCM- EE17-8. It is expected that this sub-program will also reduce customers energy bills by approximately $65 million Q. Please describe the Residential Data Analytics Pilot Sub-Program. A. The fifth sub-program, the Residential Data Analytics Pilot Sub-Program, is designed to provide residential customers with energy bill insights and energy savings recommendations to reduce their energy bills. These insights will be periodically provided to customers in the form of home energy reports that will be delivered electronically or via postal mail. The sub-program will provide PSE&G with valuable insights into energy usage behaviors, identify energy efficiency opportunities within the residential customer class, and provide customers with the opportunity to further customize their home energy assessment. PSE&G is proposing to commit up to $2.5 million in direct investment to support the Residential Data Analytics Pilot Sub-Program, which will provide estimated energy savings

10 of 43 million kwhs and 4.7 million therms over the life of the sub-program. See Schedule MCM-EE17-8. It is expected that this sub-program will also reduce customer s energy bills by $12 million Q. Can you summarize the benefits of the five EE 2017 sub-programs? A. These five sub-programs will help meet the goals of the New Jersey Energy Master Plan, by reducing energy bills, creating jobs and improving the environment. In addition, the proposed extension of the existing three sub-programs ensures continuity of these highly successful sub-programs for our customers. The new sub-programs also provide an entry into the residential market utilizing emerging technologies that can produce energy savings and valuable energy insights for residential customers. PSE&G believes that the EE 2017 sub-programs strike a balance between extending existing sub-programs, developing new sub-programs utilizing emerging technologies, and achieving the State s energy goals and priorities Q. Has PSE&G completed a cost effectiveness analysis for the EE 2017 Program? A. Yes. PSE&G has engaged Gabel Associates to complete a cost benefit analysis. That analysis demonstrates the cost effectiveness of the sub-programs. See Schedule MCM- EE III. LEVEL OF INVESTMENT AND PROGRAM TERM Q. Please summarize the amount of investment proposed and the time period for which this investment will be made. A. PSE&G anticipates committing up to $74 million in direct investment over a period of approximately two years towards the delivery of the five sub-programs identified above.

11 The proposed investment and program terms are intended to provide continuity for existing utility energy efficiency sub-programs, and support innovative energy efficiency programs that drive energy savings in the residential sector. PSE&G proposes that any sub-program over- or under-spending on the EE 2017 Programs may be carried over into subsequent years, so long as the total spending for each sub-program does not exceed the sub-program total. Based on market conditions and the level of market response to each sub-program, PSE&G also proposes that it have the ability to transfer sub-program funding between sub-programs after the initial year of the EE 2017 Program, in order to maximize energy savings and sub-program resources. 10 IV. SUB-PROGRAM DESCRIPTIONS Q. Where can descriptions of the various sub-programs proposed in the EE 2017 Program be found? A. The proposed EE 2017 sub-programs are described below, with additional MFR subprogram design and incentive structure details included in Schedule MCM-EE Q. Please describe the extension to the Direct Install Sub-Program. A. The current EEE Extension II Direct Install Sub-Program provides turnkey energy efficiency services to government and non-profit entities as well as small business owners located in UEZs. Based on its experience, PSE&G has found that many of these customers can benefit from energy efficiency improvements in typical applications (such as lighting and HVAC) but may lack the capital and/or resources to implement these measures. The PSE&G Direct Install Sub-Program reduces the challenges these customers face. It reduces the complexity of implementing energy efficiency improvements by providing a seamless

12 turnkey service, from opportunity identification, to direct installation of measures with no out of pocket cost, through the interest free repayment of the customer s share on their PSE&G bill Q. What is the target market for the Direct Install Sub-Program? A. The Direct Install Sub-Program will continue to target government and non-profit entities along with small business customers located in a UEZ that are in PSE&G s gas and/or electric service territory. Eligible facilities are those with an annual peak kw demand of 200 kw or less and include municipal, local, state, and federal government offices, courtrooms, town halls, police and fire stations, sanitation department buildings, transportation department structures, regional authorities, correctional facilities, community centers, non-profit facilities, and small businesses Q. How does the Direct Install Sub-Program work? A. The Direct Install Sub-Program provides participants with a free walk-through energy audit evaluation of eligible facilities, a report of recommended energy-savings improvements, and installation of ECMs recommended by the energy assessment. Subprogram services will be provided through qualified audit and installation professionals retained by PSE&G. For the EEE Extension II Program, PSE&G hired vendors through a competitive solicitation in PSE&G may extend the contracts of these vendors to implement the EE 2017 Program. The PSE&G on-bill repayment option provides the participant with a manageable repayment solution, which acts as an additional incentive for sub-program participation. PSE&G will continue to provide 100% of the cost to install the recommended ECMs upfront, with the customer repaying their share of project costs interest

13 free, over time, on their PSE&G bill. Upon completion of the work, PSE&G will pay their installation professional(s) for the cost of the work performed and the customer will begin its repayment to PSE&G of 30% of the total project cost over three years or in a lump sum, if the customer prefers. Consistent with the current EEE Extension II Program, there will not be a funding cap imposed per customer in order to encourage a whole building approach Q. Are there any new innovative approaches to this sub-program that are being considered by PSE&G? A. Yes there are. To support the Direct Install Sub-Program, PSE&G will evaluate and consider tools offered by vendors such as Ecova and FirstFuel to help identify and engage customers with energy savings opportunities by utilizing energy usage information. Such tools have not been widely adopted for C&I applications, and as a result, the benefits have not been fully validated. PSE&G will consider these potential solutions to support the administration and implementation of this sub-program Q. What is the investment proposed for the Direct Install Sub-Program? A. The proposed investment for this sub-program is $15 million, which is based on PSE&G s experience implementing both the previous and current Direct Install subprograms Q. What is the second sub-program that is being proposed? A. An extension of the existing Hospital Efficiency Sub-Program is being proposed Q. What is the target market for the Hospital Efficiency Sub-Program? A. The Hospital Efficiency Sub-Program targets owners of hospital and healthcare facilities located in PSE&G s electric and/or gas service territory, including in-patient

14 hospitals and other in-patient medical facilities that operate PSE&G has identified hospitals/healthcare as a high energy use sector with aging and inefficient energy infrastructure. Hospitals and healthcare facilities are a critical component of the economy, 2 and in the absence of programs such as PSE&G s, they face budgeting and financing challenges in implementing energy efficiency upgrades. Healthcare facilities that participate in this sub-program receive an energy audit of their building(s), coupled with incentives and up-front funding for the cost of the project Q. How does the Hospital Efficiency Sub-Program work? A. PSE&G proposes to continue the Hospital Sub-Program under EE 2017 to address the wide range and types of eligible New Jersey healthcare facilities, including those entities already on PSE&G s waiting list. PSE&G will utilize either a Level I walk-through audit, as defined by the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) and/or a Level II or III investment grade audit (IGA) as appropriate depending on the type, size and age of the healthcare facility. Determination of the type of audit performed for a specific project may be made on a case-by case basis for projects as required. The sub-program will continue to provide 100% of the cost to install the recommended ECMs upfront with the customer repaying their share of project costs interest free, on their PSE&G bill. The ECMs recommended by the audit may include HVAC, building envelope, motors, lighting and other energy consuming equipment. Consistent with the EEE Extension II Program, there will not be an individual customer funding cap in order 2 See

15 to encourage a whole building approach and capture all cost effective energy efficiency measures. The sub-program will provide an incentive by buying-down the simple payback 3 of the project costs for approved ECMs by up to six years, with the resulting payback not less than three years. After the project incentive buy-down, the remaining project costs will be funded by PSE&G and will be repaid by the participant, interest free, on their PSE&G utility bills over a five-year period (or in one payment if the customer chooses), after the final sub-program inspection and financial true-up. The PSE&G on-bill repayment option provides the participant with a manageable repayment solution and acts as an additional incentive for sub-program participation. The program will also continue to require that each project be cost effective in order to be eligible for the program Q. Who will perform the audit and engineering services identified above? A. Sub-program audit and engineering services will be provided through qualified professionals retained by PSE&G. For the EEE Extension II Program, PSE&G hired vendors through a competitive solicitation in PSE&G may extend the contracts of these vendors to implement the EE 2017 Program. Customers will contract with their own installation contractor(s) Q. Does PSE&G propose any modifications to the Hospital Efficiency Sub- Program? A. Yes. To better support a whole-building approach to achieving energy efficiency for hospitals and healthcare facilities, PSE&G proposes to make two modifications to the sub- 3 Simple payback is defined as the total cost of the project divided by the value of the customer s annual energy savings.

16 program design. Under the EEE Extension II Program, only ECMs with a payback of less than 15 years were eligible for participation. PSE&G proposes that all ECMs with a simple payback less than or equal to those measure s expected life, consistent with NJCEP protocols and generally accepted engineering practices, will be considered for inclusion in the subprogram. This enables cost-effective yet longer payback term ECMs, such as boiler replacements, to be included in the project. Although this is a minor change to sub-program design, the Company believes it will help to facilitate significant energy efficiency opportunities within this market segment. PSE&G also proposes to allow for the flexibility to reduce the incentive offered to participants to enable a whole-building approach. Specifically, we propose to allow for a buy-down of less than six years in order to maintain cost effectiveness. This change will provide flexibility to include additional ECMs in the project if the customer is willing to increase its contribution to the overall project cost Q. Has the existing Hospital Efficiency Sub-Program received any awards or recognition? A. The PSE&G Hospital Sub-Program received the 2012 NJ Biz Healthcare Heroes Award recognizing it as an innovative energy efficiency program. The sub-program also received national recognition and was selected for honorable mention by the American Council for an Energy-Efficient Economy (ACEEE) as part of its 2013 national review.

17 Q. What is the investment proposed for the Hospital Efficiency Sub-Program? A. The proposed investment for this sub-program is $25 million. This investment level is based on PSE&G s experience implementing the EEE Extension II Hospital Sub-Program, which will be fully committed in Q. What is the third sub-program that is being proposed? A. The third sub-program that is being proposed is an extension of the Residential Multifamily Housing Sub-Program Q. What is the target market for this proposed sub-program? A. PSE&G developed the Multifamily Sub-Program in 2008 in cooperation with the New Jersey Housing and Mortgage Finance Agency (NJHMFA) to address the needs of the multifamily housing sector, including NJHMFA s affordable multifamily housing and non- HMFA facilities. Since many existing multifamily properties are located in urban areas within PSE&G s service territory, this partnership has provided a unique opportunity to support New Jersey economic development while addressing a market segment that has 15 traditionally been underserved. 4 This sub-program provides owners of multifamily housing facilities (of five units or greater) an energy audit of their building(s), coupled with incentives and up-front funding for the cost of eligible ECMs Q. How does the Residential Multifamily Housing Sub-Program work? A. PSE&G proposes to continue the Residential Multifamily Housing Sub-Program under EE 2017 to address the wide range and types of eligible New Jersey multifamily 4 See American Council for an Energy-Efficient Economy, Apartment Hunters: Programs Searching for Energy Savings in Multifamily Buildings, p.iii, December 2013.

18 housing stock. PSE&G will utilize either a Level I walk-through audit, as defined by the ASHRAE and/or a Level II or III IGA as appropriate depending on the characteristics of the multifamily facility. Determination as to the type of audit performed for a specific project may be made on a case-by case basis. The sub-program will continue to provide 100% of the cost to install the recommended ECMs upfront, with customers repaying their share of project costs, interest free, over time on their PSE&G bill, as described in more detail below. The ECMs recommended by the audit may include lighting, HVAC, motors, domestic hot water equipment, appliances, insulation, air sealing and other energy efficiency opportunities. Consistent with the current EEE Extension II Program, PSE&G will not impose a funding cap on individual customers in order to encourage a whole building approach and capture all cost-effective ECMs. The sub-program will provide an incentive by buying-down the simple payback of the project costs for approved measures by up to six years, with the resulting payback not less than three years. After the project incentive buy-down, the remaining project costs will be funded by PSE&G and will be repaid by the participant, interest free, on their PSE&G utility bills over a ten-year period (for NJHMFA projects) or five-year period (for non-njhmfa financed (mortgaged) projects), or in one payment if the customer chooses after the final sub-program inspection and financial true-up. The PSE&G on-bill repayment option provides the participant with a manageable repayment solution and acts as an additional incentive for sub-program participation. The program will also continue to require that each project be cost effective in order to be eligible for the program.

19 Q. Who will perform the audit and engineering services for this sub-program? A. Sub-program audit and engineering services will be provided through qualified professionals retained by PSE&G. For the EEE Extension II Program, PSE&G hired vendors through a competitive solicitation in PSE&G may extend the contracts of these vendors to implement the EE 2017 Program. Customers will contract with their own installation contractor(s) Q. Does PSE&G propose any modifications to the Residential Multifamily Housing Sub-Program? A. Yes. To better support a whole-building approach to achieving energy efficiency for multifamily facilities, PSE&G proposes to make two modifications to the sub-program design that are consistent with the proposed modifications to the Hospital Efficiency Sub- Program. Under the EEE Extension II Program, only ECMs with a payback of less than 15 years were eligible for participation. PSE&G proposes that all ECMs with a simple payback less than or equal to those measure s expected life, consistent with NJCEP protocols and generally accepted engineering practices, will be considered for inclusion in the subprogram. This enables cost-effective yet longer payback term ECMs, such as boiler replacements, to be included in the project. Although this is a minor change to sub-program design, the Company believes it will help to facilitate significant energy efficiency opportunities within this market segment. PSE&G also proposes to allow for the flexibility to reduce the incentive offered to participants to enable a whole-building approach. Specifically, we propose to allow for a buy-down of less than six years in order to maintain cost effectiveness. This

20 change will provide flexibility to include additional ECMs in the project if the customer is willing to increase its contribution to the overall project cost Q. Has the Residential Multifamily Sub-Program received any awards or recognition? A. Yes. The PSE&G Residential Multifamily Sub-Program has been awarded top honors and national recognition by the ACEEE as part of their 2013 National Review of Exemplary Energy Efficiency Programs. This sub-program was commended in recognition of its success and effectiveness in helping customers realize greater levels of energy efficiency and for yielding significant economic and environmental benefits through the energy savings achieved Q. What is the investment proposed for this sub-program? A. The proposed investment for this targeted sub-program is $20 million, which is based on PSE&G s experience implementing the existing sub-program. EEE Extension II funding is expected to be fully committed in Q. What is the fourth sub-program that is being proposed? A. The fourth sub-program is an innovative Smart Thermostat Sub-Program offering Q. What is the target market for this sub-program? A. This sub-program will provide a smart thermostat offering to residential customers, and will also include a targeted smart thermostat pilot for lower income and multifamily sectors, to identify barriers to entry in those specific customer segments, and support future program design and universal access. 5 The ACEEE Award Certificate was presented to PSE&G on March 25, 2013.

21 Q. What is a smart thermostat? A. A smart thermostat is a programmable thermostat with two-way communication capability and behavioral intelligence that can provide energy savings to customers. For residential customers, the smart thermostat has the ability to auto-program itself to maximize energy savings while not compromising the customer s comfort level. Using occupancy sensors, geo-fencing capabilities, and auto-scheduling features, the device can learn a customer s behavior and comfort level to minimize heating and cooling activities at nighttime or when a house is unoccupied. Furthermore, usage data from the smart thermostat can be used to support data analytics applications that remotely identify energy savings opportunities, identify equipment breakdowns, and support future distribution system operations. These benefits are some of the reasons that both utility companies and numerous states around the country have adopted smart thermostat programs as part of their energy efficiency efforts Q. What is the Smart Thermostat Sub-Program offering that PSE&G is proposing? A. To support smart thermostat adoption, PSE&G is proposing an innovative solution that substantially decreases the upfront cost of the thermostat for customers, while offering the option to receive professional installation services provided by PSE&G. Specifically, PSE&G proposes to discount the upfront cost of a Wi-Fi smart thermostat and provide on-bill repayment for the remaining cost, including installation services if applicable Q. Who will be eligible for these incentives? A. PSE&G electric and/or gas customers with thermostat controlled heating and/or cooling will be eligible for a discount of $150 off the price of the smart thermostat, which

22 currently retails for up to $250. The remaining cost of the smart thermostat, which is approximately $100, can be repaid monthly on the customer s utility bill, at no interest, for 24 months at an amount less than $5 per month. Additionally, if a customer chooses to receive professional installation services from PSE&G, the installation service is approximately $145 for a single thermostat installation. The total cost to the customer for a smart thermostat with installation, will be approximately $10 per month for 24 months, before tax Q. Are other utility companies offering similar rebate programs? A. Yes. Similar rebate, discount and/or marketplace programs are being administered by utilities such Commonwealth Edison (Illinois), Georgia Power (Georgia), and Vectren Energy (Indiana) Q. What smart thermostats will be eligible to participate in this sub-program? A. Eligible smart thermostat vendors will be identified in advance by PSE&G for participation in the program. At a minimum, subject to finalizing agreements with each of the smart thermostat companies, it is PSE&G s intention to include smart thermostats from ecobee, Honeywell and Nest Q. How is PSE&G proposing to administer this sub-program? A. To support this sub-program, PSE&G is proposing to utilize an online marketplace to administer the thermostat transactions. The marketplace will apply an instant discount to the thermostat price, and provide customers with a choice of eligible thermostat brands and models as well as the option to schedule professional installation services through PSE&G.

23 The smart thermostat will be shipped directly to the customer regardless if they choose the installation option or not. To further help market and sell the smart thermostats to customers, PSE&G may also develop a separate rebate sub-program component for customers purchasing eligible smart thermostats in retail stores. Under this retail model, the same $150 rebate level would be applied for customers with thermostat controlled heating and/or cooling Q. Who will provide the marketplace solution and rebate processing services identified above? A. Marketplace design and rebate processing (if applicable) will be provided through qualified professionals retained by PSE&G Q. Earlier you mentioned that PSE&G will also consider a pilot offering as part of this sub-program. Can you elaborate? A. As part of this sub-program, PSE&G will include a targeted smart thermostat pilot of up to $1 million for lower income and multifamily sectors. The goal of this pilot is to better understand this market segment, identify barriers, and evaluate the customer experience. For example, since Wi-Fi connectivity provides access to the thermostat data and helps to maximize the overall benefits of the thermostat, the pilot will look at Wi-Fi connectivity continuity and availability for these market segments. A better understanding of these issues will be critical to support future smart thermostat program design in the state, and to ensure universal access.

24 Q. Are there other smart thermostat benefits, besides energy savings, that can eventually be unlocked with increased market penetration and technology advancements? A. Yes there are. While smart thermostats can produce energy savings from their autoprogramming features, the data from the thermostat and the two-way communication features offer the possibility of providing a series of other future benefits to the participant and to ratepayers. First, the data from the thermostat can be used to better profile a customer s energy usage. Given the limitations of the current residential utility meter infrastructure in PSE&G s service territory, data from the smart thermostat can give the customer and the utility insights about how, when and why customers are using energy. Furthermore, as a critical mass of smart thermostats is achieved, future demand response programs can be marketed to customers on an opt-in basis. Availability of smart thermostats with two-way communication may also support gas system operations, by providing the ability to cycle customer s furnaces to reduce gas system demand during cold mornings in the winter. Finally, smart thermostats can be used to determine when a customer s power has been restored after an outage by monitoring which smart thermostats are still connected to the internet. The proposed sub-program will not produce the volume of installed smart thermostats to provide these additional benefits. However, continued utility led efforts in this sector, coupled with market and technology advancements, can help to unlock these benefits to customers in future programs.

25 Q. What is the proposed investment for this Smart Thermostat Sub-Program? A. The proposed investment for this residential sub-program is $11.5 million, which is based on PSE&G forecasts of customer needs and interest level, and comparison against other utility programs Q. What is the fifth and final sub-program that is being proposed as part of the EE 2017 Program? A. The fifth and final sub-program that is being proposed is a Residential Data Analytics Pilot Sub-Program Q. Please describe this Residential Data Analytics Pilot Sub-Program. A. PSE&G is proposing a two year Residential Data Analytics Pilot Sub-Program to measure energy savings and customer satisfaction. This analytics solution will be developed by a third party vendor and will be evaluated by a third party entity. A typical residential data analytics program uses various data inputs to analyze a customers energy consumption to support energy efficiency efforts, and produce personalized home energy reports. Data inputs to support this sub-program include monthly meter data from electric and gas meters, weather data, and other relevant third party data, such as Zillow real estate information. This data is analyzed to develop insights into a customer s energy usage. These insights are used to identify actions and measures that the customer can implement to reduce their energy bill. Typically, these are easy to implement actions, such as setting back the thermostat when you leave the house, or simple measures such as retrofitting lights with LEDs. The information to be provided can also help to explain high energy bills to customers.

26 Q. Are similar programs being implemented by other utilities? A. Yes, similar programs are currently being successfully implemented by utilities around the country and in New Jersey, including New Jersey Natural Gas, South Jersey Gas, American Electric Power (Ohio), Commonwealth Edison (Illinois), Consolidated Edison (New York), Duke Energy (North Carolina), National Grid (Massachusetts and Rhode Island), Pacific Gas and Electric (California), San Diego Gas and Electric (California), and Xcel Energy (Minnesota) Q. How is PSE&G proposing to structure this pilot sub-program? A. PSE&G is proposing to issue personalized home energy reports to approximately 75,000 residential customers approximately six to eight times per year over a period of two years. Reports will primarily be distributed during the summer and winter months when customers are most aware of their utility bills. These reports will utilize the monthly meter data, weather data, and any other publicly available data that is relevant and complementary to the report. Additional reminders, alerts and tips may be issued to customers to engage the customer at appropriate times throughout the year Q. How will PSE&G identify the 75,000 residential customers participating in the pilot? A. Participating customers will represent a cross section of PSE&G s single family residential customer class, including low income customers. PSE&G will also ensure a process is put in place to allow customers to easily remove themselves from participation in the pilot.

27 Q. Are there other tools that will be available to customers through the Data Analytics Pilot Sub-Program to support energy insights and energy savings? A. In addition to the home energy reports, a home energy assessment tool will be available on the PSE&G website that enables all PSE&G customers to customize the factors (such as age of home and type of equipment) that are utilized in the determination of energy consumption and energy savings opportunities Q. How will PSE&G select the vendor to provide the services described for this subprogram? A. Currently, PSEG Long Island is administering a procurement process to identify a third-party analytics software platform provider. In support of New Jersey energy efficiency efforts, PSE&G staff in New Jersey is actively engaged in this procurement process, including participation in the vendor evaluation process. For this proposed sub-program in New Jersey, PSE&G will evaluate the outcome of the PSEG Long Island procurement process and the vendor selected. If the vendor meets the specifications of the sub-program offering, PSE&G reserves the right to utilize the selected vendor(s) to provide the data analytics and customer engagement solutions proposed in this sub-program. If the vendor(s) does not meet the specifications for PSE&G s proposed sub-program, then PSE&G will procure a third-party analytics platform provider through a separate competitive procurement process Q. What is the proposed investment for this pilot sub-program? A. The proposed investment for this pilot sub-program is $2.5 million over two years, which is based on PSE&G s estimate of the total costs of providing analytics on customers

28 monthly electric and/or gas usage for approximately 75,000 single family residential customers V. AMORTIZATION PERIOD Q. What is the proposed amortization period for the five proposed sub-programs that make up the EE 2017 Program? A. To be consistent with the amortization period approved in the EEE Extension II Program, PSE&G proposes to amortize its investments in the EE 2017 Program over a sevenyear period Q. Could a longer amortization period be justified? A. Yes. While PSE&G is proposing a seven-year amortization for the EE 2017 program to align with the EEE Extension II stipulation, a longer amortization period would be appropriate for the Direct Install, Hospital Efficiency, Residential Multifamily Housing and Smart Thermostat Sub-Programs. Specifically, for the Direct Install, Hospital Efficiency and Residential Multifamily Housing Sub-Programs, a 15-year amortization period would better align with the useful life of the measures being installed. This 15-year time period is conservative based on the life of the measures installed in recently completed projects. This amortization timeframe would also have the benefit of reducing the annual rate impact of the sub-programs on ratepayers. The table below contains the cost weighted average measure life for each of the identified sub-programs. The measure lives shown below are based upon the BPU s NJCEP protocols for energy savings. For measures that are not addressed by the NJCEP protocols, PSE&G utilizes industry standards combined with engineering estimates.

29 Sub-Program Average Measure Life (years) EEE Extension Multifamily 20.1 EEE Extension Hospital Efficiency 19.7 EEE Extension II Direct Install Q. What would be the appropriate amortization period for smart thermostats? A. For the Smart Thermostat Sub-Program, a 12-year amortization would be appropriate. PSE&G obtained data from E Source. Using its Measure Insights tool, which compiles measure-specific data from DSM technical reference manuals (TRMs) into a structured database, E Source identified seven different TRMs regarding smart thermostat measures and effective useful life including: Resource Ameren Missouri Technical Resource Manual Arkansas Technical Reference Manual Rhode Island Technical Reference Manual Illinois Statewide Technical Reference Manual For Energy Efficiency Version 5.0 Massachusetts Technical Reference Manual Wisconsin Focus on Energy Technical Reference Manual Savings Estimation Technical Reference Manual for the California Municipal Utilities Association Measure Life Estimate 10 years 11 years 15 years 10 years 15 years 10 years 11 years 7 8 Based on the 10 to 15 year measure life estimate, PSE&G estimates that a 12-year amortization period for smart thermostats would be appropriate Q. What s the appropriate amortization period for the Residential Data Analytics Pilot Sub-Program? A. The Company believes a seven-year amortization period is appropriate for the Residential Data Analytics Pilot Sub-Program. This conclusion is based on a Cadmus study of Data Analytics Programs, which looked at the persistence of savings for home energy

30 reporting programs. 6 The study showed that savings declined by approximately 10% to 20% per year after the initial two-year program delivery, and therefore persisted for at least an additional five years. 4 VI. CREDITS, BUDGETS AND ADMINISTRATIVE COSTS Q. How will the proposed sub-programs participate in the PJM markets? A. The eligibility and performance rules for the PJM capacity market (Reliability Pricing Model or RPM) continue to evolve and may change over the life of the proposed programs. Given current performance rules and performance risk to customers, the Company has not assumed any capacity revenues for the EE 2017 Program. To the extent that EE 2017 subprogram measures are eligible to bid, represent an acceptable performance risk to customers, and are cost-effective when considering the costs for measurement and verification (M&V), PSE&G will bid these measures in the RPM auctions. All auction proceeds net of M&V and other administrative costs will be credited to ratepayers Q. What is the overall proposed investment and administrative budget proposed for the EE 2017 Program? A. PSE&G proposes to commit up to $74 million in EE 2017 Program investment over a two-year period and proposes a $21.9 million fixed administrative allowance for ratemaking and revenue requirements. The fixed administrative allowance includes approximately $14.2 million in administrative costs to support the delivery of the sub-programs, including administration, marketing, training, program management, inspections, evaluations and quality assurance/quality control efforts. It also includes approximately $7.67 million in 6 Cadmus, Long Run Savings and Cost-Effectiveness of Home Energy Report Programs, Winter 2014/2015, available at

31 foregone distribution contributions associated with the energy savings generated from the implementation of the sub-programs. Based on current savings estimates, these foregone contributions are estimated to be approximately $11 million over five years, but PSE&G is proposing to cap these costs at 10% of the total program investment amount Q. Do the proposed investment and administrative budget estimates above include IT system costs? A. No, the Company also expects to incur approximately $2.7 million in IT system enhancement costs as the implementation of the Smart Thermostat and Residential Data Analytics Pilot Sub-Programs will require IT system modifications to improve on-bill customer repayment functionality, connect PSE&G s customer account information with the respective smart thermostat marketplace provider and data analytics solution provider, and address security and website hosting considerations Q. What are the specific IT system enhancement costs related to the Smart Thermostat and Residential Data Analytics Sub-Programs? A. Specifically, for the Smart Thermostat Sub-Program, the system modifications will provide for the integration of the customer portal with the PSE&G Customer Relationship Management system, work management integration to support installation services, and onbill financing. For the Data Analytics Pilot Sub-Program, the IT system enhancements will include integration of the data analytics platform by providing an extract of usage data to support home energy reports and the home energy assessment tool.

32 Q. What is the proposed budget breakdown for the proposed sub-programs, IT costs and administrative costs? A. The EE 2017 Program budgets are estimated as follows: Direct Install: $15 million Hospital Efficiency: $25 million Residential Multifamily Housing: $20 million Smart Thermostats: $11.5 million Residential Data Analytics Pilot: $2.5 million System modifications to support the new residential programs: $2.7 million Fixed administrative allowance: $21.9 million 12 VII. PROGRAM EVALUATION AND REPORTING Q. How will sub-program evaluation be administered for the EE 2017 Program? A. The proposed EE 2017 Hospital, Multifamily and Direct Install Sub-Programs are essentially the same as their corresponding sub-programs in the EEE Extension II Program. PSE&G therefore proposes to conduct an impact evaluation study for each of those subprograms. For the two new sub-programs, Smart Thermostats and the Data Analytics Pilot, the Company proposes to perform both process and impact evaluation studies. The impact evaluation study for the three extended sub-programs will be completed upon conclusion of all three sub-programs and contained in a single report Q. How has PSE&G evaluated its energy efficiency sub-programs? A. PSE&G utilized an independent third party firm to conduct an impact evaluation study of its programs. PSE&G's most recent impact evaluation study, conducted by the Cadmus Group for the EEE Extension Program, was completed in May 2015, and covered

33 the Hospital, Multifamily and Direct Install Sub-Programs. Cadmus found that PSE&G's programs performed well in estimating energy savings, as measured by comparing evaluated savings to tracked savings. The results for this measure, called the realization rate, are provided in Table 1. See Schedule MCM-EE With regard to net savings, an earlier impact evaluation conducted in 2014 by the Cadmus Group for the EEE and Carbon Abatement Programs found a net-to-gross (NTG) factor of 99% for the Hospital and Multifamily Sub-Programs, and 98.9% for the Direct 9 Install Sub-Program. 7 The high NTG factor indicates that most of these savings would not have been achieved without PSE&G s sub-programs. Due to the overwhelming evidence of low free ridership in PSE&G s programs and minimal program design changes between the CA/EEE and [EEE Extension] programs, Cadmus did not repeat the NTG study for the [EEE Extension] program. See Schedule MCM-EE17-12 at page 3. PSE&G has engaged the Cadmus Group to conduct an impact evaluation study for the EEE Extension II Program. As per the Board Order for that program, an 7 Net savings for an energy efficiency program represent impacts achieved and attributable to that program. Energy efficiency evaluation studies typically determine a net-to-gross (NTG) factor that signifies the fraction of verified gross savings attributable to a program. A NTG factor less than one indicates some verified savings would have occurred without the program s influence. Conversely, a NTG value greater than one indicates the program influenced energy savings beyond those it tracks and pays for.

34 interim impact evaluation report will be completed by August 2018, with a final report due one year from the completion of the last projects Q. How will PSE&G report to the BPU and Rate Counsel about the proposed EE 2017 Program implementation? A. PSE&G will provide monthly electronic activity reports for the proposed EE 2017 Program. Those reports will be provided no later than 60 days after the end of each calendar month. PSE&G will work with the Office of Clean Energy Staff and the Program Administrator to identify the specific data required Q. How has PSE&G been reporting to the BPU and Rate Counsel regarding implementation of its current sub-programs to date? A. PSE&G has been filing quarterly reports to the BPU and Rate Counsel covering investment, administrative costs, and energy savings for its programs on an ongoing basis. The most recent report, covering the fourth quarter of 2016, was filed on January 31, 2017, and was supplemented on February 13, Electronic data transfers from PSE&G s system to the New Jersey Office of Clean Energy s (OCEs) data management system had been in place up until March After that, the OCEs data management system was upgraded, resulting in significantly revised data requirements and file formats. PSE&G has also been in the process of upgrading its energy efficiency portfolio management system. PSE&G and the Board s designated program manager have been working together to define the new data transfer requirements, and we expect to resume electronic data transfers in mid

35 VIII. CONCLUSION Q. Do you have any concluding statements? A. Yes, the proposed EE 2017 Program will enable the Company to satisfy the continued customer demand for energy efficiency improvements in the currently served market segments, specifically hospitals, residential multifamily housing and government, non-profit and UEZ small business entities located in PSE&G s service territory. In addition, the two newly proposed sub-programs will advance energy efficiency solutions that can help residential customers reduce energy bills, and provide energy usage insights and recommendations that can easily be implemented to reduce the customer s energy bill. The five EE 2017 sub-programs are consistent with the New Jersey Energy Master Plan, reduce energy bills, create jobs and improve the environment. In addition, the proposed extension of the existing three sub-programs ensures continuity of these highly successful sub-programs. This concludes my testimony at this time.

36 SCHEDULE INDEX Schedule MCM-EE Qualifications Schedule MCM-EE Details - Minimum Filing Requirements Schedule MCM-EE Contracts Schedule MCM-EE Marketing Materials Schedule MCM-EE Budgets and Repayments Schedule MCM-EE Budget Categories Schedule MCM-EE Participants Schedule MCM-EE Energy Savings Schedule MCM-EE Emissions Savings Schedule MCM-EE NJCEP Program Comparison Schedule MCM-EE Cost Effectiveness Screening Schedule MCM-EE PSE&G Impact Evaluation Study ELECTRONIC WORKPAPER INDEX WP-MCM- EE17-1.xlsx WP-MCM-EE17-2A.xlsx WP-MCM-EE17-2B.xlsx WP-MCM-EE17-2C.xlsx

37 SCHEDULE MCM-EE17-1 PAGE 1 OF CREDENTIALS OF M. COURTNEY McCORMICK VICE PRESIDENT RENEWABLES AND ENERGY SOLUTIONS My name is M. Courtney McCormick and I am employed by Public Service Electric and Gas Company (PSE&G, the Company) as the Vice President Renewables and Energy Solutions. In this role, I have primary management and oversight responsibility for the market strategy, development and implementation of the Company s solar, energy efficiency and demand response programs EDUCATIONAL BACKGROUND I have a Bachelor of Arts degree in Economics from Barnard College, Columbia University, and a Juris Doctor degree from Vanderbilt University Law School WORK EXPERIENCE I have worked for PSE&G and its affiliate PSEG Services Corporation for over nine years in various positions, as well as for six years as a corporate and securities attorney with the law firms of Pillsbury Winthrop LLP and King & Spalding, LLP in their New York offices. I joined PSEG in March of 2008 as Associate General Corporate Counsel, and assumed the role of Corporate Secretary in July of From 2010 through 2015, I took on increasing responsibility for oversight of the company s

38 SCHEDULE MCM-EE17-1 PAGE 2 OF corporate governance and corporate transactions, including financings, mergers and acquisitions, public and private securities offerings, as well as records management, shareholder services and securities and stock exchange matters and reporting compliance. I was named Vice President Deputy General Counsel and Corporate Secretary in April 2014, at which time I also assumed oversight responsibility for the company s claims and corporate security function, including business continuity and crisis management planning. In December of 2015, I was named Vice President Renewables and Energy Solutions. My professional experience includes a broad background in federal securities law, corporate transactions and corporate governance, with a specialization in the energy and utilities industry. Further areas of expertise include federal and state policy relating to renewables and energy efficiency and utility regulation. I am a member of the Board of Directors of the Smart Electric Power Alliance as well as a member of the Edison Electric Industries Retail Executive Advisory Committee.

39 MINIMUM FILING REQUIREMENTS (MFRs) SCHEDULE MCM-EE17-2 PAGE 1 OF 50 This Schedule presents the MFRs for the Public Service Electric and Gas Company (PSE&G or the Company) Energy Efficiency 2017 (EE 2017) Program. applicable and common to all EE 2017 sub-programs are addressed in Section I. MFRs MFRs applicable to specific sub-programs are addressed in Section II. I. General Comments Applying to All Sub-Programs If approved by the New Jersey Board of Public Utilities (the Board or the BPU), the proposed EE 2017 Program will benefit PSE&G customers by removing barriers to energy efficiency investment while creating and maintaining jobs, improving the environment, continuing the program momentum created by past PSE&G investments in energy efficiency, and supporting the State s Energy Master Plan (EMP) energy efficiency objectives. A. Administration - MFR Section II-F(iv) PSE&G will provide all EE 2017 Program administration functions and manage all activities required to support the delivery of sub-program services to customers, which includes customer interaction, application and contract review and processing, inspections, customer surveys, evaluation, results tracking and reporting, customer billing, vendor management, and invoice processing. PSE&G will oversee sub-program implementation utilizing both PSE&G employees and sub-contractors, as appropriate. PSE&G will review and consider customer PSE&G bill payment history in implementing all sub-programs, with the exception of the proposed smart thermostat pilot for lower income and multifamily customers, and the Residential Data Analytics Pilot Sub-Program.

40 SCHEDULE MCM-EE17-2 PAGE 2 OF 50 B. Budgets, Administrative Costs, Energy Savings, Environmental Benefits - MFR Section II-H, Section II-L and Section II-C. Estimated annual investments, administrative costs, and repayments for each subprogram are provided in Schedule MCM-EE17-5. These calculations are documented in the electronic workpapers (WP-MCM-EE17-1.xlsx). Schedule MCM-EE17-6 provides estimated sub-program investment and administrative costs by the BPU cost categories. PSE&G estimates of annual participants for each sub-program are documented in Schedule MCM-EE17-7. Energy savings, annual and lifetime, overall and for each participant, were estimated for each EE 2017 sub-program as documented in Schedule MCM-EE17-8. Avoided airborne emissions were estimated using projected sub-program energy savings by applying electric and gas emissions factors developed by the New Jersey Department of Environmental Protection (NJDEP) and documented in the New Jersey Clean Energy Program (NJCEP) Protocols. Avoided airborne emissions for each sub-program, annual and lifetime, overall and for each participant, are provided in Schedule MCM-EE17-9. PSE&G engaged Gabel Associates to develop a cost-benefit analysis. A summary of the cost benefit analysis for the five sub-programs is included in Schedule MCM-EE C. Credits, Offsets, Allowances, and Certificates - MFR Section III-G Please refer to the Testimony of M. Courtney McCormick (Attachment 1 to the Petition), Section VI. D. General Filing Requirements - MFR Section I-E PSE&G will collect data from the EE 2017 Program for a subsequent review of sub-program benefits. PSE&G will track the following information: customer participation;

41 SCHEDULE MCM-EE17-2 PAGE 3 OF 50 customer repayments; program spending; energy savings measures installed; energy savings based on NJCEP Protocols or generally accepted engineering practices; and environmental benefits (CO2, NOX, SO2, Hg). E. Smart Growth Benefits/ Impacts - MFR Section III-E Given the nature of PSE&G s service territory, the Company expects that many of the EE 2017 Program participants will be located in the State s urban cores, and PSE&G anticipates that the EE 2017 sub-programs will contribute to the economic development of Smart Growth neighborhoods and areas. No other Smart Growth benefits or impacts have been identified. F. Contracts - MFR Section II-J Sub-program services will be provided through qualified professionals retained by PSE&G. Vendor selection criteria typically will include overall quality, completeness and responsiveness to the RFP, quality of approach, prior experience, and cost. In addition, the vendors selected to deliver the EE 2017 sub-programs will have demonstrated successful delivery of similar programs and should be able to provide verified results from previous programs. PSE&G intends on utilizing its standard Contract Terms and Conditions documents. See Schedule MCM-EE17-3. The EE 2017 sub-programs will utilize numerous documents throughout the course of sub-program implementation to move customers through the various sub-program participation steps. Current sub-program documents may be revised and modified, as well as new ones created, to reflect the EE 2017 sub-program offers. These sub-program documents include applications, customer audit access agreements, customer authorization agreements for

42 SCHEDULE MCM-EE17-2 PAGE 4 OF 50 the provision of program services, cost repayment agreements, and cost true-up documents as required. Where applicable, landlord permission forms and repayment agreements will also be developed for sub-programs in which the landlord must authorize the work to be performed and may be responsible for sub-program repayment. For customers that participate in the EE 2017 Residential Multifamily Housing and Hospital Efficiency Sub-Programs, documents will be based on the documents utilized in those current EEE Extension II sub-programs. See the attached EEE Extension II Hospital Efficiency Sub-Program Master Customer Agreement in Schedule MCM-EE17-3, which is provided for illustrative purposes only. For customers that participate in the Direct Install Sub-Program, documents will be modeled on the current sub-program forms utilized for the previously approved EEE Extension II. See the attached EEE Extension II Government and Non-Profit Sub-Program Customer Contract (Terms & Conditions) Installation and Repayment Agreement in Schedule MCM- EE17-3 which is also provided for illustrative purposes only. G. Complaint Resolution - MFR Section II-K Customer complaints relating to the design, delivery, or administration of PSE&G s sub-programs may be made through various PSE&G customer contact personnel/departments or directly to the BPU. In both instances, the immediate issue would be referred to EE 2017 Program management personnel to investigate and resolve. PSE&G will utilize the same complaint resolution procedures in the EE 2017 Program as were approved for use in the EEE Extension II Program. PSE&G will attempt to resolve disputes with its customers informally as indicated in the first instance. Disputes that involve PSE&G s

43 SCHEDULE MCM-EE17-2 PAGE 5 OF 50 administration of the EE 2017 Program that cannot be resolved informally will be resolved through the BPU s existing process for customer complaints within the appropriate Division or the Office of Administrative Law. Disputes between PSE&G and its sub-program vendors will be resolved in accordance with contract provisions. Disputes under the EE 2017 Program that involve monetary claims or civil damages that cannot be decided by the BPU will be resolved in an appropriate court of law. H. Criteria Used to Select Program - MFR Section II-G Please refer to Sections II and III of M. Courtney McCormick s testimony. I. Market Barriers - MFR Section III-B A key value of PSE&G s current EEE Extension II Program and the proposed EE 2017 Program (and related detailed design) is the ability to remove market barriers that commonly prevent the adoption of economic energy efficient investments. These barriers generally fall into two categories: (1) awareness/behavior, and (2) financial/structural. Awareness/behavior barriers may include: low awareness and attention to energy efficiency (due to the customers lack of information about end-use energy consumption, how energy efficiency improvements would impact the bill, and potential products or services that could serve to reduce consumption); customer preference (customers may prefer products or models that are less energy efficient due to other drivers); or low risk tolerance for making investments in energy efficiency (due to the customers lack of confidence that the investments will result in meaningful savings). Similarly, financial/structural barriers may include: limited capital availability; high hurdle rates (high financing costs and requirement for quick paybacks); and split incentives (such as issues associated with landlord/tenant relationships).

44 SCHEDULE MCM-EE17-2 PAGE 6 OF 50 The EE 2017 Program will continue to reduce these barriers for participating customers. For example, the Direct Install, Hospital Efficiency and Residential Multifamily Housing Sub-Programs will provide free energy audits and a report of findings to participating customers. This information will enable customers to become educated about the benefits of energy efficiency as well as present opportunities to make energy efficiency improvements in their facilities. The audits coupled with program support will also provide customers with the information necessary to make an investment in energy efficiency. Additionally, PSE&G will provide upfront financing to help alleviate the capital availability barrier that may exist for customers. Participants in the EE 2017 sub-programs will also have an affordable and convenient on-bill repayment option for their share of the cost of energy efficiency upgrades. In addition, PSE&G utilizes a unique and effective approach to energy efficiency by providing a whole building retrofit in order to achieve deep energy savings opportunities where cost effective. This is accomplished by working with both building owners and tenants to help overcome tenant landlord split incentive by assessing energy savings opportunities in common areas as well as tenant spaces, thus reducing energy costs and increasing the comfort of residents. The Smart Thermostat Sub-Program will make it easier for residential customers to lower their energy bills by generating customer interest, removing the high upfront cost of smart thermostats, and offering professional installation services. These thermostats will program themselves to maximize energy savings as well as maintain comfort for the customer. The Residential Data Analytics Pilot Sub-Program will also make energy savings opportunities easier for residential customers to identify, by issuing periodic home energy reports. The home

45 SCHEDULE MCM-EE17-2 PAGE 7 OF 50 energy reports will use data from various sources, including meter and weather data, to identify likely energy savings opportunities that the customer can implement, and will offer a comparison of their energy usage to that of comparable homes. These reports will help educate customers about energy savings measures that can be implemented, and similar electric and gas utility programs around the country have had positive results. J. Impact on Marketplace, Competition, Employment, Economic Development and New Business MFR Section III-A In addition to enabling energy savings to customers, another key benefit of the EE 2017 Program is the positive impact it will have on job creation and economic development. Using the Rutgers methodology to calculate job-years, the EE 2017 Program is estimated to create approximately 700 job-years in order to complete projects participating in the EE 2017 Program. 1 Specific job types that will benefit from EE 2017 Program implementation include: electricians, plumbers, HVAC mechanics and technicians, energy auditors, laborers, engineers and construction managers. The work shall be performed by union craft paid in accordance with the union contract or by non-union employees paid at a rate equivalent to the prevailing wage for the county in which the work is to be performed using the job classification that most closely aligns to the work being performed. Union labor will be used if the work qualifies as a utility construction project. If applicable, all requirements of the New Jersey Prevailing Wage Act and the New Jersey Division of Property Management and Construction will be adhered to. 1 The value of job-years is based on the Rutgers report Analysis for the 2011 Draft New Jersey Energy Master Plan Update using the 7.91 per one million investment factor (

46 K. Relationship to New Jersey State Policies - MFR Section II-E SCHEDULE MCM-EE17-2 PAGE 8 OF 50 In addition to providing direct benefits to PSE&G customers, the proposed EE 2017 Program also directly supports two of the six overarching goals of the New Jersey Energy Master Plan (EMP): (1) drive down the cost of energy for all customers; and (2) reward energy efficiency and energy conservation and reduce peak demand. 2 Efficiency: The New Jersey EMP also recognized and supported utility efforts in Energy We continue to recognize the value of the EDCs in delivering EE and conservation programs. The EDCs already have access to the potential consumers of these resources through the monthly billing statements, call centers, field offices, and field activities. Billing statements as well as online tools can highlight conservation and EE programs when customers are paying closest attention to the cost of energy in their homes or places of business. With the appropriate education and training, EDC employees can convert routine customer interactions into effective outreach for these programs.... The LDCs and EDCs have experience developing and implementing EE programs for their customers. Most of these EE programs are simple and cost effective.. PSE&G has a number of programs such as the Direct Install Program for Government Facilities that provide similar benefits. 3 L. Complement / Impact NJCEP MFR Section II-C The PSE&G EE 2017 Program seeks to support and complement the NJCEP energy efficiency programs by creating programs that target sub-markets that are better served by specialized utility offerings than NJCEP s broader, statewide offerings. It also develops new energy efficiency offerings to residential customers that leverage the unique relationship PSE&G has with its residential customers, and are not currently provided by the NJCEP. Therefore, the New Jersey Energy Master Plan, December 6, 2011, p. 1, and updated December Ibid, p. 119.

47 SCHEDULE MCM-EE17-2 PAGE 9 OF 50 proposed utility program will complement and add to the job creation, energy savings and pollution reduction achieved by NJCEP offerings. Please also refer to Schedule MCM-EE17-10, which provides a detailed comparison of the EE 2017 sub-programs to the comparable NJCEP program offers. II. SUB-PROGRAMS 1. Direct Install Sub-Program A. Program Description MFR Section II-A Please see Section IV(A) of M. Courtney McCormick s testimony. B. Target Market and Eligibility MFR Section II-F(i) This sub-program will target government and non-profit facilities and small business owners with a peak demand of 200 kw or less located in PSE&G s electric and/or gas service territory. 4 Eligible facilities include municipal, local, state, and federal government offices, courtrooms, town halls, police and fire stations, sanitation department buildings, transportation department structures, regional authorities, correctional facilities, community centers, non-profit facilities, and small businesses. Small businesses must be located in an Urban Enterprise Zone (UEZ), as designated by the State at the time this filing is approved, in order to participate in this sub-program. 4 The inclusion of small business customers represents an extension of the Small Business Direct Install Sub-Program implemented under PSE&G s Carbon Abatement Program (CA Program) approved by the BPU on December 16, 2008, Docket No. EO , the Energy Efficiency Economic Stimulus Program (EEE Program) approved by the BPU on July 16, 2009, Docket No. EO , and the Energy Efficiency Economic Stimulus Extension Program II (EEE Ext II Program) approved by the BPU in April 2015, Docket No. EO

48 C. Offerings and Customer Incentives - MFR Section II-F(ii) SCHEDULE MCM-EE17-2 PAGE 10 OF 50 The Direct Install Sub-Program will offer a walk-through energy evaluation of eligible facilities and provide a report of recommended energy conservation measures (ECMs) as well as the direct installation of ECMs, as recommended by the energy assessment. Subprogram services will be provided through qualified audit and installation professionals retained by PSE&G. PSE&G will continue to provide 100% of the cost to install the agreed upon ECMs upfront with the customer repaying its share of project costs interest free, over time, on their PSE&G bill. Upon completion of the work, PSE&G will pay their audit and installation professional(s) for the cost of the work performed and the customer will repay its share to PSE&G. The customer must repay 30% of the total project cost to PSE&G over three years or in a lump sum if the customer prefers. Consistent with the current EEE Extension II Program, there will not be a funding cap imposed per customer in order to encourage a whole building approach. The PSE&G on-bill repayment option provides the participant with a manageable repayment solution and acts as an additional incentive for sub-program participation. Should the customer sell or otherwise vacate the facility where work was performed before the end of the repayment period, the remaining balance shall be immediately due and payable to PSE&G. PSE&G may allow the customer to arrange for alternate arrangements for full repayment, or PSE&G may allow the new building owner to assume the project and its associated repayment obligations. Installed measures will include lighting upgrades and controls, Heating, Ventilation and Cooling (HVAC), Refrigeration, Motors, Variable Frequency Drives and other measures where appropriate. Customers participating in this sub-program may not have received or applied for incentives under the NJCEP program for the same measures.

49 D. Marketing - MFR Section II-M SCHEDULE MCM-EE17-2 PAGE 11 OF 50 PSE&G will leverage and build upon past program marketing activities. The subprogram delivery contractors will market the sub-program to eligible customers. The subprogram may also be marketed through a variety of channels including the PSE&G website and industry organizations. Additionally, eligible facilities may be identified by PSE&G s Regional Public Affairs and Large Customer Support personnel through their relationships with various municipal officials. To further support the Direct Install Sub-Program, PSE&G will evaluate and consider tools offered by vendors such as Ecova and FirstFuel to help identify and engage customers with energy savings opportunities by utilizing energy usage information. Such tools have not been widely adopted for C&I applications, and as a result, the benefits have not been fully validated. PSE&G will consider these potential solutions to support the administration and implementation of this sub-program. Sub-program brochures, fact sheets, and presentation materials may be developed as required to support these efforts. PSE&G may also utilize targeted advertising such as industry magazine advertisements, as needed. See Schedule MCM-EE17-4 for a copy of the brochure utilized for the current EEE Extension II Direct Install Sub-Program for Government, Non-Profit and Small Business Facilities, which is for illustrative purposes only. E. Delivery Mechanisms - MFR Section II-F(v) and Section II-I PSE&G will provide sub-program administration and will manage all activities required to support the delivery of services to customers including oversight of sub-program operations. Sub-program services will be provided through qualified audit and installation

50 SCHEDULE MCM-EE17-2 PAGE 12 OF 50 professionals retained by PSE&G. For the EEE Extension II Program, PSE&G hired vendors through a competitive solicitation in PSE&G may extend the contracts of these vendors to implement the EE 2017 Program. Customers approved to participate in the Direct Install incentive offering receive the direct installation of measures as recommended by an energy audit and shown in the Customer s Project Proposal. The sub-program contractor(s) will be compensated by PSE&G upon completion of the work and will be responsible to provide all audit, installation, and related services including, but not limited to: Performing an on-site energy audit and collecting all equipment and energy data; Analyzing information and identifying opportunities for efficiency improvements; Presentation of comprehensive energy savings recommendations to the customer, including costs and savings estimates; Obtaining customer and landlord agreement to proceed with installation; Installation of eligible measures per customer agreement, including all appropriate permitting as required; Tracking and reporting sub-program activity through a project management system; Proper disposal of all removed equipment. F. Quality Assurance Provisions - MFR Section II-F(iii) Quality assurance is ensured in two steps. First, the program delivery contractors sample and inspect their own work and that of their sub-contractors. Second, PSE&G utilizes an independent third-party quality assurance inspector to perform inspections targeting up to 10% of completed projects. In addition to these two steps, PSE&G personnel inspect a sampling of projects after upgrades are completed. These inspections are intended to identify the quality and

51 SCHEDULE MCM-EE17-2 PAGE 13 OF 50 appropriateness of installations, and review adequacy and accuracy of project paperwork. PSE&G will advise the customer as part of the sub-program that an inspector may call for an appointment to perform an inspection at their facility following the installation of the ECMs. PSE&G or its contractors may also install metering and other M&V tools at a participant s facility as needed for various types of program evaluation and data collection. G. Goals, Energy Savings and Environment Benefits MFR Section II-L and III- C Estimated Electric and Gas energy savings in kwh, kw, and therms can be found in Schedule MCM-EE17-8. Estimated emissions savings can be found in Schedule MCM-EE17-9. H. Budgets, Administrative Costs, Savings, Benefits MFR Section II-H An investment of $15 million will be allotted to this sub-program, based on experience in the existing EEE Extension II Program, and the anticipated sub-program demand and duration. Detailed budgets, including sub-program investment and administrative costs can be found in Schedule MCM-EE17-6. I. Differences and Similarities to NJCEP MFR Section II-B In order to eliminate any potential customer confusion, the PSE&G Direct Install Sub-Program has been structured so that it is similar to the NJCEP Direct Install Program in terms of program delivery, available measures and incentive levels. However, unlike the NJCEP Direct Install Program, the PSE&G sub-program specifically targets government and non-profit facilities along with small businesses located in UEZs. Further, the PSE&G sub-program differs from the NJCEP offering as it is able to provide 100% of the project cost up front and an on-bill

52 SCHEDULE MCM-EE17-2 PAGE 14 OF 50 repayment option that allows the participant to repay its portion of the project costs over a three year period on their PSE&G utility bill, interest free. The NJCEP Direct Install Program has an incentive cap of $125,000 per project; the PSE&G program does not have a cap on the amount of the project to allow for a whole building retrofit. The NJCEP also provides the Local Government Energy Audit Program which provides audits for local governments, New Jersey State Colleges and Universities, and 501(c)(3) non-profit agencies. There is no financing component for the measure installation through that program; however, participants may apply to the NJCEP SmartStart Buildings Program, Direct Install Program or Pay for Performance Program. See Schedule MCM-EE17-10 for a detailed comparison to the NJCEP. PSE&G will work closely with the BPU Office of Clean Energy to coordinate between the PSE&G Direct Install Sub-Program and the NJCEP Direct Install Program to minimize any potential customer confusion and avoid any program inefficiencies. J. Consistent / Different from Utility Programs - MFR Section II-D In general, local, state, and federal government facilities are eligible for incentives under most commercial sector energy efficiency programs. This is true of the NJCEP Direct Install Program described above, and the National Grid Direct Install Program as well as of most rebate programs. There are relatively few programs that specifically target government entities. K. Document any Similar Programs - MFR Section III-D E Source, a national research, consulting, and market research firm, identified the following direct install programs.

53 New York Power Authority (NYPA) Energy Services Program (ESP) SCHEDULE MCM-EE17-2 PAGE 15 OF 50 The NYPA ESP implements energy efficiency projects at public schools and other government facilities. NYPA works with facility managers to identify, design, and install various energy conservation measures including new lighting and motors, as well as upgrades to heating, ventilation and air conditioning systems. The program is designed to address all energy efficiency improvements in a single, comprehensive effort. The projects are financed by NYPA, and the costs are recovered from the resulting electric bill savings. The facility retains all the savings once the loan is repaid. National Grid Small Business Program Programs somewhat comparable to the PSE&G Direct Install Sub-Program available in various jurisdictions (including the NJCEP Direct Install Program) have been modeled on the National Grid Small Business Program. The National Grid program targets small business customers with an average monthly demand use of 110 kw or less to reduce their energy costs by installing energy efficient equipment. The program provides a free energy audit and a report of recommended energy efficiency improvements. National Grid offers incentives of up to 60% of the cost of the installation of energy efficient equipment and customers may finance their share of the cost, interest free, for up to 12 months, or repay in one-lump sum and receive a 5% discount off the amount due. Cost-cutting, energy efficient equipment available through the program includes lighting upgrades, occupancy sensors, site specific custom projects and custom refrigeration measures.

54 SCHEDULE MCM-EE17-2 PAGE 16 OF 50 Eversource (Connecticut) C&I Solution: Small Business Energy Advantage and Retrofit The objective of the Small Business Energy Advantage ( SBEA ) program is to provide cost-effective, turnkey energy-saving services for small commercial and industrial customers who do not have the time, financial resources, or in-house expertise necessary to analyze and reduce their energy usage. The target market for SBEA is customers of less than 200 kw of peak load and, for natural gas measures, who are on a firm gas rate. Under the traditional SBEA program, the companies pay incentives for relevant energy-efficiency measures, and offer an interest-free financing option to customers for the balance. The financed contract amount appears as a line item on the customer s electric bill. The loan repayment term, which is typically determined by the simple payback of the project, is set at a level that typically provides the customer with a positive or at least neutral annual cash flow based upon the estimated energy savings resulting from the installed measures. Similarly, the customer cost for the portfolio of natural gas measures are financed as part of the on-bill repayment on the customer s electric bill. Baltimore Gas and Electric The Small Business Energy Solutions (SBES) Program is a direct install program that offers BGE s small business customers the opportunity to retrofit existing equipment with more energy efficient technologies. The program targets discretionary retrofit opportunities among certain business customers with a monthly billing demand of 60 kw or less. This program uses a limited pool of highly trained contractors to provide a comprehensive turnkey approach. Turnkey program provide an integrated end-to-end approach,

55 SCHEDULE MCM-EE17-2 PAGE 17 OF 50 with the same contractor responsible for initial marketing, the resulting audit, presentation of audit results to customers, contract completion, installation and warranty. Each contractor was assigned a unique geographic territory (at the county/city level) where they had the exclusive opportunity to deliver program services to eligible small business customers. AEP Ohio The Express Program provides small businesses with a streamlined, one-stop, turnkey energy efficiency direct installation service delivered through a program implementer. The program generates energy savings through program services and incentives to help qualifying customers reduce energy usage and lower energy costs. Incentives for Express Program projects have an initial cap of 80% of project costs. The Express Program targets small business customers, generally indicated as customers with demands of less than 100 kw or with annual energy consumption of 200,000 kwh or less, based on the last 12 months of billing history. Either the demand or energy consumption limits could be adjusted during implementation to ensure customer sectors are served equitably during the Plan period, and to address the needs of underserved sectors. Corporate-owned national accounts are excluded from participation. Funding for large franchisee-owned national accounts customers are eligible but may be limited to ensure local small business participation. Consistent with the residential low income customer sector, small non-profit customers may require additional incentives to afford energy efficiency improvements; these opportunities will be considered to remove barriers to this sector s participation.

56 2. Hospital Efficiency Sub-Program A. Program Description MFR Section II-A Please see Section IV(B) of M. Courtney McCormick s testimony. SCHEDULE MCM-EE17-2 PAGE 18 OF 50 B. Target Market and Eligibility MFR Section II-F(i) PSE&G developed this sub-program offering to address a high energy-usage target market. The Hospital Efficiency Sub-Program targets hospitals and health care facilities located in PSE&G s electric and/or gas service territory including in-patient hospitals and other in-patient medical facilities that operate This sub-program offering is intended to allow PSE&G to continue to meet the energy efficiency needs of these facilities by providing customized operational and retrofit recommendations, energy audits, incentives and technical assistance to implement energy efficiency and process improvements that reduce energy usage. C. Offerings and Customer Incentives - MFR Section II-F(ii) Healthcare facilities receive a detailed, professional audit of their building(s) at no cost, incentives, and up-front financing for the cost of eligible ECMs. For large, complicated facilities, this will be an Investment Grade Audit (IGA); for smaller, simpler projects, this will be a less intensive audit in order to reduce overall sub-program costs and maintain cost effectiveness of smaller projects. The Hospital Sub-Program audit and inspection services are provided through qualified audit and engineering professionals retained by PSE&G. The ECMs recommended by the audit may include HVAC, building envelope, motors, lighting, and other energy consuming equipment. Consistent with the current EEE Extension II Program, there will not be a funding

57 SCHEDULE MCM-EE17-2 PAGE 19 OF 50 cap imposed per customer in order to encourage a whole building deep retrofit approach. The sub-program will provide an incentive by buying-down the simple payback 5 of the project costs for approved measures by up to six years, with the resulting payback not less than three years. After the project incentive buy-down, the remaining project costs will be funded by PSE&G and will be repaid by the participant, interest free, on their PSE&G utility bills over a five-year period (or in one payment if the customer chooses), after the final sub-program inspection and financial true-up. The PSE&G on-bill repayment option provides the participant with a manageable repayment solution and acts as an additional incentive for sub-program participation. The sub-program will also continue to require that each project be cost effective in order to be eligible for the program. Customers participating in this sub-program may not receive incentives under other utility programs or the NJCEP for the same measures. The Hospital Sub-Program incentive structure will continue to provide a four-step payment process, described under Delivery Mechanisms. The full cost of the ECMs (including engineering and cost of construction) are covered through a combination of PSE&G s incentive and customer repayments. Should the customer sell or otherwise vacate the property before the end of the repayment period, the remaining repayment balance shall be immediately payable. PSE&G may allow the customer to arrange for alternate arrangements for full repayment, or PSE&G may allow the new building owner to assume the project and its associated repayment obligations. To better support a whole-building approach to achieving energy efficiency for hospitals and healthcare facilities, PSE&G proposes to make two modifications to the sub- 5 Simple payback is defined as the total cost of the project divided by the value of the customer s annual energy savings.

58 SCHEDULE MCM-EE17-2 PAGE 20 OF 50 program design. Under the EEE Extension II Program, only ECMs with a payback of less than 15 years were eligible for participation. PSE&G proposes that all ECMs with a simple payback less than or equal to those measure s expected life, consistent with NJCEP protocols and generally accepted engineering practices, will be considered for inclusion in the sub-program. This enables cost-effective yet longer payback term ECMs, such as boiler replacements, to be included in the project. Although this is a minor change to sub-program design, the Company believes it will help to facilitate significant energy efficiency opportunities within this market segment. PSE&G also proposes to allow for the flexibility to reduce the incentive offered to participants to enable a whole-building approach. Specifically, we propose to allow for a buydown of less than six years in order to maintain cost effectiveness. This change will provide flexibility to include additional ECMs in the project if the customer is willing to increase its contribution to the overall project cost. D. Marketing - MFR Section II-M This sub-program will continue to leverage utility large customer support personnel as well as sub-program staff to identify potential participating hospital and healthcare new construction and retrofit projects. Sub-program specific marketing efforts will target hospital decision makers facility managers, energy managers, and administrators. PSE&G may also utilize targeted advertising such as industry magazine advertisements, as needed. E. Delivery Mechanisms - MFR Section II-F(v) and Section II-I Sub-program audit and engineering services will be provided through qualified professionals retained by PSE&G. For the EEE Extension II Program, PSE&G hired vendors

59 SCHEDULE MCM-EE17-2 PAGE 21 OF 50 through a competitive solicitation in PSE&G may extend the contracts of these vendors to implement the EE 2017 Program. The sub-program delivery typically occurs in four steps: Step One: Audit of Healthcare Facility(s). PSE&G assesses the required level of American Society of Heating, Refrigerating, and Air Conditioning Engineers (ASHRAE) audit to perform based on the complexity of the facility and the potential ECMs; an IGA may not be required of all facilities. The PSE&G sub-program contractor(s) then performs the appropriate level energy audit and prepares a customized audit report that includes a list of recommended ECM upgrades. PSE&G reviews the recommended ECM upgrades with the customer. Step Two: Engineering Analysis of Project. Based on the audit results, an engineering analysis is performed as needed, payback and project cost effectiveness screening is conducted, and a set of approved ECMs is selected for the project. The sub-program contractor then prepares bid-ready documents and works with the customer to prepare a project Scope of Work, which will be used by the customer to obtain contractor cost estimates for ECM installation. Step Three: Scope of Work/Contractor Bids. The customer issues the Scope of Work to obtain contractor bids. PSE&G, the sub-program engineering contractor and the customer review the contractor bids/costs and the customer then selects the contractor(s). Once the contractor bids are received, the proposed project is again screened for cost effectiveness and the customer is presented the funding commitment proposal. Once (i) the customer and PSE&G have executed the funding commitment and (ii) and the contractor and the customer have executed applicable agreements and contracts, the first progress payment equal to approximately 30% of the ECM installation cost can be issued to the customer to initiate the project (Stage 1 Progress Payment). Step Four: Measures Installation and Inspections. PSE&G and the energy engineer acting as construction administration agent monitors the project progress, verifies equipment ordering and receipt, and monitors project cash flows. Upon verification of

60 SCHEDULE MCM-EE17-2 PAGE 22 OF 50 the project progress, a series of Stage 2 progress payments up to 50% of total project commitment can be issued. When the project is 100% complete, ECM commissioning, a final project true-up and final inspection take place. If the inspection is successful and approved, the final payment based on the results of project true-up is determined and issued. If the final costs are less than the estimated project commitment, the final payment will be adjusted down to reflect the actual costs. If the final costs are more than the estimated project commitment, the final payment will not be adjusted and will be paid according to the executed agreements and contracts specifying original costs. The project is now complete and customer repayments begin. The progress payment schedule described above is designed to ensure that building owners are able to pay their contractors on a timely basis. Project progress and the project cash flow needs will be monitored and verified by PSE&G s sub-program operations manager. PSE&G has implemented an internal control process including a payment committee team to review and approve all progress payments made to the customer. Before any progress payments are approved by the payment committee, the committee must see evidence of project progress, which may include approved contractor invoices, engineer inspection reports and the like. The final progress payment is the final payment to the customer of approximately 20% of the total project financial commitment which may be adjusted based on the cost true-up. F. Quality Assurance Provisions MFR Section II-F(iii) PSE&G reviews and approves all projects and monitors the project progress, verifies equipment, and monitors project costs. PSE&G will conduct an on-site inspection(s) prior to releasing every Stage 2 Progress Payment. PSE&G will also conduct a postimplementation inspection of each completed project and a true-up of project costs prior to making the final financial incentive payment. Final inspections and commissioning training will

61 SCHEDULE MCM-EE17-2 PAGE 23 OF 50 be conducted by one of PSE&G s contracted energy engineers. PSE&G or its contractors may also install metering and other M&V tools at a participant s facility as needed for various types of program evaluation and data collection. G. Goals, Energy Savings and Environment Benefits MFR Section II-L and III- C Estimated Electric and Gas energy savings in kwh, kw, and therms can be found in Schedule MCM-EE17-8. Estimated emissions savings can be found in Schedule MCM-EE17-9. H. Budgets, Administrative Costs, Savings, Benefits MFR Section II-H An investment of $25 million will be allotted to this sub-program, based on experience in the existing EEE Extension II Program and the anticipated program demand and duration. Detailed budgets, including sub-program investment and administrative costs can be found in Schedule MCM-EE17-6. I. Differences and Similarities to NJCEP MFR Section II-B The Hospital Efficiency Sub-Program provides an integrated, whole building approach to assessing energy efficiency potential and delivering energy efficiency services to the healthcare sector. Key attributes that are different from the NJCEP Programs are that the PSE&G sub-program pays for all project costs upfront and during construction, there is no per project funding cap, and the participating facility can repay its portion of the project costs after final inspection on the PSE&G bill interest-free. See Schedule MCM-EE17-10 for a detailed comparison to the NJCEP.

62 SCHEDULE MCM-EE17-2 PAGE 24 OF 50 Although no existing NJCEP programs are targeted specifically to this market segment, the NJCEP provides two program options for C&I projects that could be applicable to hospital/healthcare facilities: SmartStart Buildings and Pay for Performance. SmartStart provides design assistance, incentives for custom measures, and prescriptive rebates for approved energy saving measures after the approved measure is installed. Pay for Performance is a whole building approach to C&I retrofit projects that provides incentives based on customer achievement of energy savings plans. Incentives are paid in three (3) stages: Energy Reduction Plan, Installation of Recommended Measures, and Post Construction Benchmarking and Trueup. J. Consistent / Different from Utility Programs MFR Section II-D PSE&G is not aware of any other program that provides the same combination of whole building opportunity assessment, design assistance, operational assistance, financial incentives and utility on-bill repayment options. K. Document any Similar Programs - MFR Section III-D There are several utilities that provide targeted healthcare energy efficiency programs to customers that include hospitals among other eligible facility types, such as clinics, rehabilitation centers and medical offices. These programs deliver a range of financial incentives and technical assistance to help these customers implement energy efficiency improvements. Healthcare efficiency programs at CenterPoint Energy, Pacific Gas & Electric, San Diego Gas & Electric and Oncor share a common program implementer in Wildan Energy Solutions, and have similar program designs. Ameren Illinois does not provide incentives specific to healthcare

63 SCHEDULE MCM-EE17-2 PAGE 25 OF 50 facilities, but rather provides healthcare facilities with a guide to services available from the utility s general programs targeted to commercial buildings. CenterPoint Energy Healthcare Energy Efficiency Program (HEEP) The Healthcare Energy Efficiency Program (HEEP) of CenterPoint Energy offers cash incentives and technical assistance to healthcare facilities for the implementation of energy conservation measures. This program is specifically designed for small to medium sized healthcare facilities with 300 beds or less, such as hospitals, clinics, assisted living/nursing care and medical offices with CenterPoint Energy s electric service area. Technical assistance is provided to healthcare customers for energy assessments and benchmarking, savings calculations, and project management. Eligible conservation measures that have been included in previous projects include lighting retrofits, kitchen hood controls, HVAC temperature resets, pressure resets, sensor repairs, and chiller sequencing. Pacific Gas & Electric and San Diego Gas & Electric Healthcare Energy Efficiency Program (HEEP) The Healthcare Energy Efficiency Program (HEEP) of Pacific Gas & Electric (PG&E) and San Diego Gas & Electric (SDG&E) offers customized energy audits and assessments to healthcare customers that help identify energy saving projects and solutions. HEEP is available to healthcare-related facilities that include hospitals, rehabilitation centers, dental offices, clinics and even animal/veterinary care facilities. The program offers customers a full range of project development, management and implementation services for energy efficiency measures which include HVAC system adjustments, lighting retrofits, medical equipment, and motor upgrades.

64 SCHEDULE MCM-EE17-2 PAGE 26 OF 50 Oncor Healthcare Facilities Program The Healthcare Facilities Program of Oncor provides incentives to customers who install approved energy efficiency measures in healthcare facilities. Eligible projects include lighting retrofits, HVAC upgrades, motor enhancements and thermal storage projects. Incentives are available for both new construction and retrofit projects. Technical assistance is also available, such as facility benchmarking, energy assessments, retro-commissioning studies, project recommendations, savings estimates and measurement & verification (M&V) assistance. Eligible projects may be subject to a minimum incentive in measured and verified savings in order to qualify for the program. Ameren Illinois Healthcare Incentives Program The Healthcare Incentives Program of Ameren Illinois offers healthcare customers cash incentives for energy efficiency improvements that include lighting upgrades, HVAC and water heater replacements, variable frequency drive (VFD) installs, kitchen equipment upgrades, retro-commissioning, and custom projects. For standard projects, Customers may receive up to $500,000 in electric incentives, per project, and an additional $250,000 in gas incentives, per project. The program does not offer incentives specific to healthcare facilities, but rather provides healthcare facilities with a guide to services available from the utility s general programs targeted to commercial buildings. 3. Residential Multifamily Housing Sub-Program A. Program Description MFR Section II-A Please see Section IV(C) of M. Courtney McCormick s testimony.

65 B. Target Market and Eligibility MFR Section II-F(i) SCHEDULE MCM-EE17-2 PAGE 27 OF 50 The Multifamily Sub-Program targets the following market segments where natural gas and/or electricity are provided by PSE&G: New Jersey Housing and Mortgage Finance Agency (NJHMFA) multifamily housing projects with five or more units; and Non-NJHMFA affordable and market rate housing projects with five or more units. C. Offerings and Customer Incentives - MFR Section II-F(ii) PSE&G s Multifamily Sub-Program is designed to increase energy efficiency and reduce carbon emissions of multifamily housing developments, in common areas, equipment spaces and tenant spaces. Building owners receive a detailed, professional audit of their building(s) at no cost, incentives, and up-front financing for the cost of eligible ECMs. For large, complicated facilities, PSE&G will perform an Investment Grade Audit (IGA); for smaller, simpler projects, a less intensive audit may be undertaken in order to reduce overall subprogram costs and maintain cost effectiveness of smaller projects. The Multifamily Sub-Program audit and inspection services are provided through qualified audit and engineering professionals retained by PSE&G. The ECMs recommended by the audit may include lighting, HVAC, motors, domestic hot water equipment, appliances, insulation, air sealing and other energy efficiency opportunities. Consistent with the current EEE Extension II Program, there will not be a funding cap imposed per customer in order to encourage a whole building deep retrofit approach. The sub-program will provide an incentive by buying-down the simple payback of the project costs for approved measures by up to six years, with the resulting payback not less than three years. After the project incentive buy-down, the remaining project costs will be funded by PSE&G and will be repaid by the participant,

66 SCHEDULE MCM-EE17-2 PAGE 28 OF 50 interest free, on their PSE&G utility bills over a five-year period (or in one payment if the customer chooses), after the final sub-program inspection and financial true-up. The PSE&G onbill repayment option provides the participant with a manageable repayment solution and acts as an additional incentive for sub-program participation. The sub-program will also continue to require that each project be cost effective in order to be eligible for the program. Customers participating in this sub-program may not receive incentives under other utility programs or the NJCEP for the same measures. The Multifamily Sub-Program incentive structure provides a four-step payment process, described under Delivery Mechanisms. The full cost of the ECMs (including engineering and cost of construction) are covered through a combination of PSE&G s incentive and zero percent on-bill repayment option. Should the owner sell or otherwise vacate the property before the end of the repayment period, the remaining balance shall be immediately payable. PSE&G may allow the customer to arrange for alternate arrangements for full repayment, or PSE&G may allow the new building owner to assume the project and its associated repayment obligations. To better support a whole-building approach to achieving energy efficiency for multifamily facilities, PSE&G proposes to make two modifications to the sub-program design that are consistent with the proposed modifications to the Hospital Efficiency Sub-Program. Under the EEE Extension II Program, only ECMs with a payback of less than 15 years were eligible for participation. PSE&G proposes that all ECMs with a simple payback less than or equal to those measure s expected life, consistent with NJCEP protocols and generally accepted engineering practices, will be considered for inclusion in the sub-program. This enables cost-

67 SCHEDULE MCM-EE17-2 PAGE 29 OF 50 effective yet longer payback term ECMs, such as boiler replacements, to be included in the project. Although this is a minor change to sub-program design, the Company believes it will help to facilitate significant energy efficiency opportunities within this market segment. PSE&G also proposes to allow for the flexibility to reduce the incentive offered to participants to enable a whole-building approach. Specifically, we propose to allow for a buydown of less than six years in order to maintain cost effectiveness. This change will provide flexibility to include additional ECMs in the project if the customer is willing to increase its contribution to the overall project cost. D. Marketing - MFR Section II-M The Company plans on continuing to utilize the marketing approaches that are in place for the existing EEE Extension II Program Residential Multifamily Sub-Program. Currently the EEE Extension II sub-program utilizes an overview summary document, which is provided to multifamily building owners/facility managers who express interest in the subprogram. That summary material can be found in Schedule MCM-EE17-4, which is for illustrative purposes only. Additional marketing materials such as a sub-program brochure and fact-sheets may be developed as needed. PSE&G may also utilize targeted advertising such as industry magazine advertisements, as needed. The current sub-program is sometimes marketed to multifamily housing organizations at monthly meetings and through information the organizations provide to their members. In addition to these formal presentations, sub-program awareness has grown through word-of-mouth in the industry. Additionally, previous

68 SCHEDULE MCM-EE17-2 PAGE 30 OF 50 participants have enrolled additional properties based on their positive experience with the subprogram. E. Delivery Mechanisms - MFR Section II-F(v) and Section II-I Sub-program audit and engineering services will be provided through qualified professionals retained by PSE&G. For the EEE Extension II Program, PSE&G hired vendors through a competitive solicitation in PSE&G may extend the contracts of these vendors to implement the EE 2017 Program. Customers will contract with their own installation contractor(s). The sub-program delivery typically occurs in four steps: Step One: Audit of Multifamily Building(s). PSE&G assesses the required level of ASHRAE audit to perform based on the complexity of the facility and the potential ECMs; an IGA may not be required of all facilities. The PSE&G sub-program contractor(s) then performs the appropriate level energy audit and prepares a customized audit report that includes a list of recommended ECM upgrades. PSE&G reviews the ECM upgrades with the customer. Step Two: Engineering Analysis of Project. Based on the audit results, an engineering analysis is performed, as needed, payback and project cost effectiveness screening is conducted, and a set of approved ECMs is selected for the project. The sub-program contractor then prepares bid-ready documents and works with the customer to prepare a project Scope of Work, which will be used by the customer to obtain contractor cost estimates for ECM installation. Step Three: Scope of Work/Contractor Bids. The customer issues the Scope of Work to obtain contractor bids. NJHMFA projects will follow NJHMFA bidding practices. PSE&G, the sub-program engineering contractor and the customer review the contractor bids/costs and the customer then selects the contractor(s). Once the contractor bids are received, the proposed project is again screened for cost effectiveness and the customer is

69 SCHEDULE MCM-EE17-2 PAGE 31 OF 50 presented the funding commitment proposal. Once (i) the customer and PSE&G have executed the funding commitment and (ii) and the contractor and the customer have executed applicable agreements and contracts, the first progress payment equal to approximately 30% of the ECM installation cost can be issued to the customer to initiate the project (Stage 1 Progress Payment). Step Four: Measures Installation and Inspections. PSE&G and the energy engineer acting as construction administration agent monitors project progress, verifies equipment ordering and receipt, and monitors project cash flows. Upon verification of project progress, a series of Stage 2 progress payments up to 50% of total project commitment can be issued. When the project is 100% complete, ECM commissioning, a final project true-up and final inspection take place. If the inspection is successful and approved, the final payment based on the results of project true-up is determined and issued. If the final costs are less than the estimated project commitment, the final payment will be adjusted down to reflect the actual costs. If the final costs are more than the estimated project commitment, the final payment will not be adjusted and will be paid according to the executed agreements and contracts specifying original costs. The project is now complete and customer repayments begin. The progress payment schedule described above is designed to ensure that building owners are able to pay their contractors on a timely basis. Project progress and the project cash flow needs will be monitored and verified by PSE&G s sub-program operations manager. PSE&G has implemented an internal control process including a payment committee team to review and approve all progress payments made to the customer. Before any progress payments are approved by the payment committee, the committee must see evidence of project progress, which may include approved contractor invoices, engineer inspection reports and the

70 SCHEDULE MCM-EE17-2 PAGE 32 OF 50 like. The final progress payment is the final payment to the customer of approximately 20% of the total project financial commitment which may be adjusted based on the cost true-up. F. Quality Assurance Provisions - MFR Section II-F(iii) PSE&G reviews and approves all projects and monitors the project progress, verifies equipment, and monitors project costs. PSE&G will conduct an on-site inspection(s) prior to releasing every Stage 2 Progress Payment. PSE&G will also conduct a postimplementation inspection of each completed project and a true-up of project costs prior to making the final financial incentive payment. Final inspections and commissioning training will be conducted by one of PSE&G s contracted energy engineers. PSE&G or its contractors may also install metering and other M&V tools at a participant s facility as needed for various types of program evaluation and data collection. G. Goals, Energy Savings and Environment Benefits - MFR Section II-L and III- C Estimated Electric and Gas energy savings in kwh, kw, and therms can be found in Schedule MCM-EE17-8. Estimated emissions savings can be found in Schedule MCM-EE17-9. H. Budgets, Administrative Costs, Savings, Benefits - MFR Section II-H An investment of $20 million will be allotted to this sub-program based on the size of the current program waiting list as well as the anticipated program demand. Detailed budgets, including sub-program investment and administrative costs, can be found in Schedule MCM-EE17-6.

71 I. Differences and Similarities to NJCEP - MFR Section II-B SCHEDULE MCM-EE17-2 PAGE 33 OF 50 Although no existing NJCEP programs are targeted specifically to this market segment, multifamily building projects could be eligible for various NJCEP programs depending upon the project type and the measures installed. The NJCEP currently provides two primary program options for multifamily customers: SmartStart Buildings and Pay for Performance. SmartStart provides design assistance, incentives for custom measures, and prescriptive rebates for specific energy saving measures after the approved individual measure is installed. Pay for Performance is a whole building approach to C&I retrofit projects that provides incentives based on customer achievement of energy savings plans. Incentives are paid in three steps: Energy Reduction Plan, Installation of Recommended Measures, and Post Construction Benchmarking and True-up. PSE&G s Multifamily Sub-Program provides a customized approach for the multifamily market, initially developed in concert with the NJHMFA at the request of the State. Key attributes that are different from the NJCEP Programs are that the PSE&G sub-program pays for all project costs upfront and during construction and the participating facility can repay its portion of the project costs after final inspection on their PSE&G bill interest-free. PSE&G also provides a whole building retrofit in order to achieve deep energy savings opportunities and there is no per project funding cap. The sub-program works with both the building owners and tenants to help overcome tenant-landlord split incentives by assessing energy savings in common areas as well as tenant spaces, thus reducing energy costs and increasing the comfort of the residents. See Schedule MCM-EE17-10 for a detailed comparison to the NJCEP.

72 J. Consistent / Different from Utility Programs - MFR Section II-D SCHEDULE MCM-EE17-2 PAGE 34 OF 50 The Multifamily Sub-Program was based on the PSE&G Hospital Efficiency Sub- Program design, but modified to address the multifamily market. K. Document any Similar Programs - MFR Section III-D According to DSMdat, E Source s database of more than 6,000 demand side management programs in the US and Canada, there are more than 350 utility programs available to multifamily buildings. Program design varies widely, but the following components are commonly included: Direct Install measures such as lightbulbs, faucet aerators, and low-flow showerheads. These tenant measures often provide a significant portion of savings attributed to these programs. Packaged incentives, particularly for multifamily new construction. An example would be receiving a per unit incentive for developers who install several Energy Star appliances and high efficiency lighting. Commercial/Multifamily hybrids. Multifamily programs often include the same measures and incentives as commercial programs, but may include a lower incentive cap than their commercial counterparts. Four programs are highlighted below that share similarities to PSE&G s sub-program design. Energize Connecticut The Multifamily Initiative of the Energize Connecticut Program offers custom assistance to multifamily buildings. The program will assist owners with existing energy improvement projects or can help identify and design new cost-effective upgrades. The program includes a free energy assessment, improvement suggestions, incentives, and financing.

73 SCHEDULE MCM-EE17-2 PAGE 35 OF 50 Financing options vary based on building type and tenant income, but include zero to six percent interest rates with payment on or separate from the utility bill. SoCal Gas SoCal Gas s Zero Percent On-Bill Financing program is available to multifamily and other commercial properties interested in energy efficiency improvements. Loans are interest-free, non-transferable, and paid back on monthly utility bills. Financing is provided in addition to rebates with eligible measures determined by their simple payback period. The maximum loan term is five years or the useful equipment life of the measure, whichever is shorter. Tacoma Public Utilities Tacoma Public Utility s Save in Multifamily program includes a free assessment, rebates, and zero-interest loans for windows, ductless heat pumps, and insulation upgrades. Loans are available in seven-year terms, but are only available for 2-4 unit dwellings. Holyoke Gas & Electric The Commercial Energy Conservation Program at Holyoke Gas & Electric provides zero percent on-bill financing for energy efficiency improvements and solar installations on commercial and multifamily buildings properties. Multifamily loans are limited to $20,000 for energy efficiency and $10,000 for solar. The program requires that buildings have an energy audit at customer s expense before they are eligible for financing. Additional financing requirements include 12 months of clear payment history and being current on city taxes.

74 SCHEDULE MCM-EE17-2 PAGE 36 OF Smart Thermostat Sub-Program A. Program Description MFR Section II-A Please see Section IV(D) of M. Courtney McCormick s testimony. B. Target Market and Eligibility MFR Section II-F(i) This Smart Thermostat Sub-Program offering will be available to PSE&G electric and/or gas customers with thermostat controlled heating and/or cooling. PSE&G marketing efforts are expected to primarily target single family residential customers. The proposed Smart Thermostat Sub-Program pilot portion of the sub-program will target lower income residential customers and multifamily buildings. C. Offerings and Customer Incentives - RGGI Section II-F(ii) To support this sub-program, PSE&G is proposing to utilize an online marketplace to administer the thermostat transactions. The marketplace will apply an instant discount to the thermostat price, and provide customers with a choice of eligible thermostat brands and models as well as the option to schedule professional installation services through PSE&G. The smart thermostat will be shipped directly to the customer regardless if they choose the installation option or not. The Smart Thermostat Sub-Program will offer customers a discount of $150 off the price of the smart thermostat, which currently retails for up to $250. The remaining cost of the smart thermostat, which is approximately $100, can be repaid monthly on the customer s utility bill, at no interest, for 24 months at an amount less than $5 per month. Additionally, if a customer chooses to receive professional installation services from PSE&G, the installation

75 SCHEDULE MCM-EE17-2 PAGE 37 OF 50 service is approximately $145 for a single thermostat installation. The total cost to the customer for a smart thermostat with installation will be approximately $10 per month, at no interest, for 24 months, before tax. Eligible smart thermostats will be identified in advance by PSE&G for participation in the program. At a minimum, subject to finalizing agreements with each of the smart thermostat companies, it is PSE&G s intention to include smart thermostats from ecobee, Honeywell and Nest. To the extent PSE&G realizes any additional financial benefits through purchasing smart thermostats in bulk, such benefits will be credited to ratepayers. To further help market and sell the smart thermostats to customers, PSE&G may also develop a separate rebate sub-program component for customers purchasing eligible smart thermostats in retail stores. Under this retail model, the same $150 rebate level would be applied for customers with thermostat controlled heating and/or cooling. As part of this sub-program, PSE&G will include a targeted smart thermostat pilot of up to $1 million for lower income and multifamily sectors. The goal of this pilot is to better understand this market segment, identify barriers, and evaluate the customer experience. For example, since Wi-Fi connectivity provides access to the thermostat data and helps to maximize the overall benefits of the thermostat, the pilot will look at Wi-Fi connectivity continuity and availability for these market segments. A better understanding of these issues will be critical to support future smart thermostat program design in the state, and to ensure universal access.

76 SCHEDULE MCM-EE17-2 PAGE 38 OF 50 D. Marketing - MFR Section II-M PSE&G may use a variety of channels to market the program, including bill inserts, messages, digital web ads, direct mail, the PSE&G website, customer service/call centers, and other channels as needed. E. Delivery Mechanisms - MFR Section II-F(v) and Section II-I PSE&G will provide sub-program administration and will manage all activities required to support the delivery of services to customers including oversight of sub-program operations. Sub-program services, including the contractor(s) providing the marketplace solution, will be retained by PSE&G and hired through a competitive bid process. The contractor providing the marketplace solution will be responsible for operating the online marketplace including, but not limited to: Order processing and fulfillment Verifying that the purchaser is a PSE&G electric and/or gas customer Coordinating on-bill repayment with PSE&G Coordinating professional PSE&G installation services F. Quality Assurance Provisions - MFR Section II-F(iii) Quality assurance procedures will be established with the marketplace vendors. Potential procedures may include review of monthly sales reports, website activity reports, customer satisfaction surveys, etc. PSE&G or its contractors may also install metering and other M&V tools at a participant s facility as needed for various types of program evaluation and data collection.

77 SCHEDULE MCM-EE17-2 PAGE 39 OF 50 G. Goals, Energy Savings and Environment Benefits - MFR Section II-L and III- C Estimated Electric and Gas energy savings in kwh, kw, and therms can be found in Schedule MCM- EE17-8. Estimated emissions savings can be found in Schedule MCM- EE17-9. H. Budgets, Administrative Costs, Savings, Benefits - MFR Section II-H An investment of $11.5 million will be allotted to this sub-program. Detailed budgets, including sub-program investment and administrative costs can be found in Schedule MCM- EE17-6. I. Differences and Similarities to NJCEP - MFR Section II-B residential customers. No existing NJCEP programs include incentives for smart thermostats for J. Consistent / Different from Utility Programs - MFR Section II-D E Source has identified 97 smart thermostat programs offered by 75 utilities in the US and Canada as highlighted in the recently published report, Smart Thermostat Pilots and Programs. 6 The report provides, in an excel format, a list of the programs (and links to their website) and many attributes including the thermostat vendor and thermostat models, the resource targeted (energy efficiency and/or demand response), and the incentive amount and method (rebate, bill credit, free thermostat). The report also provides evaluation data and links to program evaluations for energy efficiency savings and demand response impacts. 6 E Source s Smart Thermostat Pilots and Programs: A Catalog of Current and Recent Utility Initiatives;

78 SCHEDULE MCM-EE17-2 PAGE 40 OF 50 The vast majority of the programs identified in the report utilize a mail-in rebate structure, with a handful that offer a free thermostat and installation (direct install), and a few that offer bill credits (primarily demand response programs). A few utilities offer smart thermostats through an online marketplace in partnership with different vendors. E Source did not identify any utilities that offer on-bill repayment. K. Document any Similar Programs - MFR Section III-D Similar rebate, discount and/or marketplace programs are being administered by utilities such as Commonwealth Edison (Illinois), Georgia Power (Georgia), and Vectren Energy (Indiana). Commonwealth Edison (ComEd) ComEd is leading an aggressive initiative to install one million smart thermostats in northern Illinois over a five-year period, beginning in Under this program, ComEd is providing smart thermostat rebates of up to $100, but not to exceed 50% of the smart thermostat price. This rebate is coupled with rebates from the local gas utilities, including Peoples Gas Delivery and Nicor Gas of up to $50. Eligible smart thermostats for purchase include products from ecobee, Nest and Honeywell. Customers that sign up for an energy assessment through one of the participating utilities will receive an ecobee3 smart thermostat for $100 and free installation services. Smart thermostats can be purchased with an instant rebate on the ComEd branded online marketplace, or through a traditional rebate application if the thermostat was purchased at a third party retailer.

79 SCHEDULE MCM-EE17-2 PAGE 41 OF 50 Georgia Power Georgia Power provides an online marketplace (the Georgia Power Marketplace), where residential homeowners can purchase smart thermostats which are eligible for an instant rebate of up to $100 when they upgrade from a standard to a programmable smart thermostat. The smart thermostats offered for purchase include products from Emerson, ecobee and Nest. All of the thermostats offered by the marketplace require Wi-Fi in the home and range in price from $64.50 to $149 after the rebate is applied. Vectren Energy Vectren s Indiana Residential Rebate Program offers rebates to customers that purchase Programmable ($10), Wi-Fi ($50) or Smart Thermostats ($75) and submit a rebate application to Vectren Energy within 60 days of purchase/installation. Customers complete a rebate application along with receipts as with proof of purchase and professional installation (if applicable) and submit the form to Vectren. 5. Residential Data Analytics Pilot Sub-Program A. Program Description MFR Section II-A Please see Section IV(E) of M. Courtney McCormick s testimony. B. Target Market and Eligibility MFR Section II-F(i) This sub-program will target 75,000 single family residential customers and the customers will be identified and selected by PSE&G.

80 C. Offerings and Customer Incentives - RGGI Section II-F(ii) SCHEDULE MCM-EE17-2 PAGE 42 OF 50 There are no specific customer offerings or incentives attached to this subprogram. Instead, the purpose is to identify the energy savings potential of these home energy reports for consideration as part of a broader offering to customers. PSE&G is proposing to issue personalized home energy reports to approximately 75,000 residential customers approximately six to eight times per year. Reports will primarily be distributed during the summer and winter months when customers are most aware of their utility bills. These reports will utilize the monthly meter data, weather data, and any other publicly available data that is relevant and complementary to the report. Additional reminders, alerts and tips may be issued to customers to engage the customer at appropriate times throughout the year. In addition to the home energy reports, a home energy assessment tool will be available on the PSE&G website that enables all PSE&G customers to customize the factors (such as age of home and type of equipment) that are utilized in the determination of energy consumption and energy savings opportunities. D. Marketing - MFR Section II-M customers to participate. There is no marketing component for this program, as PSE&G will select E. Delivery Mechanisms - MFR Section II-F(v) and Section II-I PSE&G will provide sub-program administration and will manage all activities required to support the delivery of services to customers including oversight of sub-program

81 SCHEDULE MCM-EE17-2 PAGE 43 OF 50 operations. Contractor(s) will provide sub-program services for the residential data analytics solution. Those contractors will be retained by PSE&G. Currently, PSEG Long Island is administering a procurement process to identify a third-party analytics software platform provider. In support of New Jersey energy efficiency efforts, PSE&G staff in New Jersey is actively engaged in this procurement process, including participation in the vendor evaluation process. For this proposed sub-program in New Jersey, PSE&G will evaluate the outcome of the PSEG Long Island procurement process and the vendor selected. If the vendor meets the specifications of the sub-program offering, PSE&G reserves the right to utilize the selected vendor(s) to provide the data analytics and customer engagement solutions proposed in this sub-program. If the vendor(s) does not meet the specifications for PSE&G s proposed sub-program, then PSE&G will procure a third-party analytics platform provider through a separate competitive procurement process. The selected contractor will provide the residential data analytics solution, including but not limited to: Providing a data analytics solution that at a minimum incorporates data from the participating customer s utility bill, weather data, and other relevant third party data, such as Zillow real estate information; Sending the home energy reports to customers; and Operating the online home energy assessment tool. F. Quality Assurance Provisions - MFR Section II-F(iii) PSE&G will randomly review customer home energy reports for quality and accuracy. Quality assurance procedures will be established with the data analytics providers(s). Potential procedures may also include review of monthly activity reports and customer

82 SCHEDULE MCM-EE17-2 PAGE 44 OF 50 satisfaction surveys. PSE&G or its contractors may also install metering and other M&V tools at a participant s facility as needed for various types of program evaluation and data collection. G. Goals, Energy Savings and Environment Benefits - MFR Section II-L and III- C Estimated Electric and Gas energy savings in kwh, kw, and therms can be found in Schedule MCM- EE17-8. Estimated emissions savings can be found in Schedule MCM- EE17-9. H. Budgets, Administrative Costs, Savings, Benefits - MFR Section II-H An investment of $2.5 million will be allotted to this sub-program. Detailed budgets, including sub-program investment and administrative costs can be found in Schedule MCM- EE17-6. I. Differences and Similarities to NJCEP - MFR Section II-B No existing NJCEP programs provide similar services to residential customers. J. Consistent / Different from Utility Programs - MFR Section II-D There are numerous utilities that provide data analytics programs to their customers, some of which have incorporated customer analytics to support commercial demandside management programs. In New Jersey, two utilities, New Jersey National Gas and South Jersey Gas, currently provide such programs, as does ComEd in Illinois. K. Document any Similar Programs - MFR Section III-D Similar programs are currently being successfully implemented by utilities around the country and in New Jersey including New Jersey Natural Gas, South Jersey Gas, American

83 SCHEDULE MCM-EE17-2 PAGE 45 OF 50 Electric Power (Ohio), Commonwealth Edison (Illinois), Consolidated Edison (New York), Duke Energy (North Carolina), National Grid (Massachusetts and Rhode Island), Pacific Gas and Electric (California), San Diego Gas and Electric (California) and Xcel Energy (Minnesota). New Jersey Natural Gas New Jersey Natural Gas Company (NJNG) offers a behavioral program intended to influence customer behavior by providing timely feedback regarding energy consumption through personalized Home Energy Reports (HER). NJNG initiated their pilot program with approximately 25,000 residential customers and a companion control group in By redesigning the program in 2013 to send 4 personalized HER reports per year instead of 6, NJNG was able to increase the pilot size to approximately 40,000 customers and increase the aggregate energy savings. South Jersey Gas South Jersey Gas Company (SJG) offers a Social Marketing and Education Program. The pilot program is designed to influence customer behavior and increase customer participation in energy efficiency and conservation programs. This SJG program is being offered to approximately 170,000 SJG residential customers. These customers will receive four mailed communication pieces per year, providing information on their energy usage, supplemented by digital communications throughout the year. A web portal for customers interested in exploring their energy use and discovering additional energy efficiency utility or statewide programs is also available. SJG will maintain a control group of customers to evaluate whether this program

84 SCHEDULE MCM-EE17-2 PAGE 46 OF 50 (1) reduces customer energy usage cost by the transfer of information, and (2) increases customer participation rates for companion energy efficiency offerings. American Electric Power (Ohio) AEP Ohio s HER Program helps residential participants reduce electricity usage by encouraging them to alter their habits of electricity use by providing positive reinforcement behavior modification. Participants are enrolled on an opt-out basis in the energy efficiency service. Participants were randomly selected for program enrollment from three AEP Ohio customer groups, including: higher-than-average electricity users, lower-income households and customer residences equipped with Advanced Metering Infrastructure. The HER Program provides participants with a written report that is received separately from their normal utility bills. Access to participant information and more relevant tips is also available through an Internet web portal available to the participant even if they opt-out of the mailed reports. Commonwealth Edison (Illinois) Commonwealth Edison (ComEd) s Home Energy Report provides select residential customers with information on how they use energy within their households. Reports and the online portal include usage comparison to that of similar nearby households, personalized energy efficiency advice, program promotions, and application of behavioral principles and social norms to drive adoption of energy efficient behaviors. Customers can opt to receive high-usage alerts via SMS text, in addition to IVR call and . The spring reports featured the smart thermostat rebate discussed above.

85 SCHEDULE MCM-EE17-2 PAGE 47 OF 50 Consolidated Edison (New York) ConEd has started a multiyear agreement with a service provider to distribute personalized energy reports to about 270,000 New York customers in Brooklyn and Westchester County. These reports will include energy usage with recommendations on specific energyrelated projects that customers can install to lower their bills. By matching customer usage and heating and cooling patterns with data like homeownership status and location, the system makes it easier to promote products to customers most likely to buy them. The effort includes a website for customers to research and buy energy-efficiency appliances, products, and services. The effort is expected to expand as ConEd completes negotiations with providers and introduces smart meters this year. Duke Energy (North Carolina) My Home Energy Report (MyHER) is a periodic comparative usage report that compares customers' energy use to similar residences in the same geographical area based upon the age, size and heating source in the home. Energy savings recommendations are included in the reports to improve the efficiency of the customer s homes. Reports are distributed up to 12 times per year; however delivery may be limited during the off-peak energy usage months in the fall and spring. Based on the usage profile of the home, suggested energy efficient tips and recommendations will be presented to the customer. Measure specific coupons rebates or other program offerings may be included in a customer s report based on the customer s energy profile.

86 SCHEDULE MCM-EE17-2 PAGE 48 OF 50 Program participants are identified through demographic information and must reside in an individually-metered single-family residence on a residential rate schedule and have at least 13 months of electric usage history with Duke Energy. MyHER uses a peer group of homes of similar size, age, type of heating fuel and geography to highlight customer's energy usage as compared to the Efficient Home of the customer's peer group. The comparisons are presented to the customer in a personalized report. Easy-to-read charts and visuals illustrate how a customer s home performed in the last month, and how it trended over time as compared to the sample set. National Grid (Massachusetts and Rhode Island) The primary objective of National Grid s HER program is to provide residential households with information on their energy consumption and tips on how to save energy to prompt them to take action to reduce their natural gas and/or electric usage. The Rhode Island HER program is administered across National Grid's entire Rhode Island customer base treating electric only, gas only and dual fuel customers. There are multiple program components as well as two pilot efforts, including the following: (1) HERs offered to multiple population segments, (2) an initiative to offer HERs to new home owners, (3) an online web portal, (4) a rewards pilot offered to HER participants, (5) a programmable communicating thermostat (PCT) pilot offered to HER participants, and (6) mass media promotional and public relations activities.

87 SCHEDULE MCM-EE17-2 PAGE 49 OF 50 Pacific Gas and Electric (California) PG&E provides free HER, which include a snapshot of the customer s homes energy use over time and in different seasons. It compares the home s energy use with similar homes in the customer s geographic area and offers customized tips and updates to help save energy and costs. San Diego Gas and Electric (California) The HER program provides residents a comparative report that contains a mix of energy consumption information, consumption comparison with similar neighbors, and customized tips for saving energy on a bi-monthly basis. The HER program uses a randomized controlled trial (RCT) experimental design. The RCT experimental design is widely considered the most effective way to establish causality between a treatment and its effect. In combination with the substantial numbers of households in both treatment and control groups, the approach produces an un-biased estimate of savings with a high level of statistical precision. The primary objective of this evaluation was to provide independent verification of electricity and gas savings attributable to the HER program. Xcel Energy (Minnesota) The Energy Feedback program provides participating customers information about their energy consumption and how that consumption compares to similar homes nearby. This is an opt-out program that uses participant and control groups to statistically calculate how much energy was saved by the participants. At the end of 2015, the program was tracking savings from six different populations: the original print report participants; participants who

88 SCHEDULE MCM-EE17-2 PAGE 50 OF 50 receive only reports; participants selected to refill the original group; print report participants added in 2013; a new group of electric-only customers; and customers who visited Xcel Energy s My Energy portal.

89 SCHEDULE MCM-EE PAGE 1 OF 25 Proprietary and Confidential PSEG SERVICES CORPORATION 80 Park Plaza Newark, New Jersey AGREEMENT FOR CONSULTING SERVICES BETWEEN PSEG SERVICES CORPORATION And DATED: CA_rev06/01/16 1

90 SCHEDULE MCM-EE PAGE 2 OF 25 TABLE OF CONTENTS 1. INTERPRETATION Agreement Documents Order of Precedence CONSULTANT REPRESENTATIONS Personnel Company Security Measures Compliance with Laws and Required Authorizations Independent Contractor Co-employment Equal Employment Opportunity/Affirmative Action / Employee Protection 9 3. COMPANY COVENANTS Company Information CONSULTANT COVENANTS Conflicts of Interest Insurance Reporting Minority and Women Owned Business Enterprises ( MWBE ) Standards of Integrity Information Security Registration as Company Supplier PERFORMANCE OF WORK Changes and Extras Company Option to Accept Defective/Non-Conforming Work Work Schedule Suspension of Work Safety. 16 CA_rev06/01/16 2

91 SCHEDULE MCM-EE PAGE 3 OF OWNERSHIP OF WORK Ownership of Work Non-Exclusivity PAYMENTS AND INVOICING Payments Invoicing Reimbursement for Inappropriate Payments/Setoff Acceptance and Waiver Taxes DELAYS AND EXTENSIONS OF TIME Time Of The Essence Extensions of Time AUDIT RIGHTS Maintenance of Records Company Rights Expense Time of Audit LIENS WARRANTY LIMITATION OF LIABILITIES INDEMNIFICATION TERM AND TERMINATION Term Termination MISCELLANEOUS Advertising CA_rev06/01/16 3

92 SCHEDULE MCM-EE PAGE 4 OF Assignment Notices Waiver No Third Party Beneficiaries Law and Venue Headings Counterparts 21 EXHIBIT A (Scope of Work) EXHIBIT B (Payment Schedule) 24 EXHIBIT C (Background Check Requirements)...22 CA_rev06/01/16 4

93 CA_rev06/01/16 5 SCHEDULE MCM-EE PAGE 5 OF 25 THIS AGREEMENT (the Agreement ), effective as of (the Effective Date ), is made by and between PSEG SERVICES CORPORATION, for the benefit of itself, and its subsidiaries and affiliates, now existing or hereafter created, having its principal office located at 80 Park Plaza, Newark, New Jersey (hereinafter Company ), and, with its principal office located at (hereinafter Consultant ). Company and Consultant may be referred to as a Party and collectively referred to as the Parties. WHEREAS, Company wishes to secure certain services involving consulting, advice, guidance, opinions, services, or other work, and including all data, documents, items or deliverables to be provided in accordance with the terms and conditions of this Agreement, as more specifically set forth in Exhibit A Scope of Work and/or corresponding Purchase Order ( Work ); and WHEREAS, Consultant is qualified, able and willing to provide the Work, subject to the terms and conditions of this Agreement; NOW, THEREFORE, in consideration of the promises and the mutual covenants and premises contained in this Agreement, the Parties agree as follows: 1. INTERPRETATION 1.1 Agreement Documents. The Agreement shall consist of this executed document and attached exhibits, together with all Purchase Orders or changes to the Purchase Orders covering the Work to be performed hereunder and any other documents incorporated by reference. A Purchase Order is a written document, signed by the Parties, or at a minimum, signed by an authorized Company representative, more specifically describing the services to be performed. 1.2 Order of Precedence. In the event of any conflict among the terms of the Agreement documents, the order of precedence shall be: any special terms and conditions contained in a Purchase Order, this Agreement, then the General Terms and Conditions on the back of the Purchase Order. The Company s good faith interpretation of the Agreement shall govern in the event of any disagreement as to the meaning or intent of the Agreement documents. 2. CONSULTANT REPRESENTATIONS 2.1 Personnel. Consultant represents that it is fully and properly experienced, qualified, licensed, organized, equipped, insured and financed to provide the Work, and that its employees and subcontractors are experienced, qualified, competent, reliable and trustworthy. All personnel who will be performing the Work shall be acceptable to the Company. The Consultant shall not substitute personnel assigned to the Work without the Company s prior written approval. The Company reserves the absolute right to deny any individual or entity access to the Company s property. 2.2 Company Security Measures. Background Checks: a) Prior to the start of any Work*, Consultant shall complete background checks and drug screenings required by Company as set forth in Exhibit C on any employee or agent of

94 CA_rev06/01/16 6 SCHEDULE MCM-EE PAGE 6 OF 25 Consultant, or its Subcontractor(s) ( Contractor Representative ), who may have access without Company escort or uninterrupted oversight to Company s or its customer s: (i) property/facilities; (ii) electronic systems or computer networks; (iii) information resource; or (iv) Confidential Information as defined in Article 4.4, ( Unescorted Access ). Background checks will be deemed valid for seven (7) years. *If Consultant has an immediate significant need to utilize a Contractor Representative for Unescorted Access to perform Work prior to completing the required checks and screenings, Consultant may apply for a waiver. A waiver must be requested in an to BAandR@pseg.com within 24 hours of the Unescorted Access. The must certify that the required checks and screenings have been initiated by one of the background screeners described below, include confirmation by that screener company (e.g. order, receipt, ), and state the circumstances necessitating the waiver. b) Consultant may utilize the services of a third party that Company has designated as its background check administrator ( Background Check Administrator ), [Information may be obtained by going to the following link: Consultant may also select its own third party to perform the applicable background checks as long as the chosen third party ( Third Party Screener or TPS ) is: 1. Accredited to conduct and verify background investigations by the National Association of Professional Background Screeners ( NAPBS ); 2. On the Company s Approved Third Party Screener List (available through Procurement); 3. Otherwise approved by Company. Once the background check is performed by the TPS, Consultant shall BAandR@pseg.com the following information: 1. A statement certifying that the required screening was completed by the TPS, the date of completion, and that the screening did not reveal negative information ( Adverse Derogatory Information or ADI ) or that the ADI, if any, was mitigated to Consultant s satisfaction; and 2. A headshot photo of the Contractor Representative. c) Consultant will then obtain a Background Check Verification Card ( BCVC ) from the Background Check Administrator and provide it to the Contractor Representative to gain Unescorted Access for Work. The Contractor Representative must be in possession of the BCVC at all times while on Site or performing Work. d) For as long as it has obligations to Company under this Contract, Consultant shall immediately give Written Notice to BAandR@pseg.com if it becomes aware that a previously vetted and cleared Contractor Representative is involved in any situation that, if discovered during the background check, would have been considered ADI. Upon discovery of ADI or removal of a Contractor Representative from having Unescorted Access for cause, Consultant shall destroy all BCVCs from the Contractor Representative and notify BA&R at: BAandR@pseg.comwithin twelve (12) hours. e) NERC/CIP Unescorted Access. Where a Contractor Representative is deemed by Company to have Unescorted Access to Company s North American Electric Reliability

95 CA_rev06/01/16 7 SCHEDULE MCM-EE PAGE 7 OF 25 Corporation ( NERC ) Critical Infrastructure Protection ( CIP ) facilities and Consultant is not using Company s Background Check Administrator to conduct the applicable background checks, Consultant shall also be required to provide a letter certification to BA&R at BAandR@pseg.com containing the following information: i. The date the background check was performed for each Contractor Representative; and ii. Written evidence of the completion of the background check in the form of a redacted background check or paid invoice from the Third Party Screener. f) If Consultant determines that a Contractor Representative no longer requires access to Company s NERC CIP facilities, Consultant shall provide Company with notice by to PSEG.contractor.termination.notice@pseg.com within twelve (12) hours of such determination. Remote Access: If the Work requires Consultant or its employees to remotely connect to Company Systems/network, and/or applications, then Consultant: a) Shall provide Company in writing with a list of Contractor Representatives who will have access to Company Systems, network, and/or applications (each a Contractor Representative with VPN access ). Such Contractor Representatives with VPN access will be required to sign a Company VPN agreement substantially in the form provided by the Company ( VPN Agreement ) prior to gaining access; b) Shall cause a copy of the VPN Agreement to be provided to each Contractor Representative with VPN access for execution and shall provide Company with an executed VPN Agreement for each such Contractor Representative; c) Shall ensure monitoring of use of Company s remote network access services by Contractor Representatives with VPN access to ensure that such use complies with the security measures established by Company, including the following: 1. Contractor Representatives shall use the remote access capability to access the Company network to conduct business for and/or on behalf of Company. 2. Contractor Representatives shall safeguard user ID codes and passwords so as to prevent use of such ID numbers by individuals other than the Contractor Representative. 3. Contractor Representatives shall not connect or be connected to any third-party network at the time the Contractor Representative is connected to the Company network, except for the third-party network being used to connect to Company. 4. Contractor Representatives utilizing a personal computer to remotely access the Company network shall install and maintain real-time anti-virus software with current virus signature protection and a personal firewall that are configured to start automatically when the computer is powered on. 5. Contractor Representatives use of the Company network shall be conducted pursuant to and in accordance with (i) Company security practices and Standards of Integrity and (ii) to the extent applicable and not in conflict with the Company security practices and Standards of Integrity, Consultant s security practices; and d) Shall notify Company in writing within five (5) Business Days of detecting any violation of the Company security practices or Standards of Integrity committed by a Contractor Representative in remotely accessing the Company network utilizing the remote access capability. Export Control:

96 SCHEDULE MCM-EE PAGE 8 OF 25 a) Each Party agrees to comply with and obtain required licenses and exemptions under the export controls Laws as applicable to such Party with regard to any export or re-export of controlled items as reasonably necessary in connection with this Contract. Neither Consultant nor any of its subsidiaries, contractors, or Subcontractors shall export or reexport any technical data, process, product, or service, directly or indirectly (including the release of controlled technology to foreign nationals from controlled countries) to any country for which the United States government or any agency thereof requires an export license or other government approval without first obtaining such license or approval and providing Written Notice of same to Company. b) Consultant acknowledges that performance of this Contract is subject to compliance with applicable United States laws, regulations, and/or orders, including, but not limited to, those that relate to the export of nuclear materials, equipment, software, and technology, such as the United States Department of Energy regulations found in 10 CFR Part 810, the United States Nuclear Regulatory Commission regulations in 10 CFR Part 110, and the United States Department of Commerce s Export Administration Regulations found in 15 CFR Part 730 et seq., as may be amended (collectively, Export Control Laws ). Consultant agrees to comply with all Export Control Laws. Consultant shall not export, reexport, transfer or retransfer, directly or indirectly, any items, software, or technology controlled for export by the Export Control Laws, except as permitted by such Export Control Laws. This includes release of export-controlled items, software, or technology to Foreign Nationals (as defined below) wherever they may be located, including inside the United States ( Deemed Export ). Notwithstanding anything to the contrary in this Contract, and in order to ensure compliance with Export Control Laws, Consultant shall not, absent prior written approval by Company: (i) disclose or furnish export-controlled items, software, or technology to any Foreign Nationals who are: (1) of a different nationality than Consultant or (2) not employees of Consultant (including agents and other representatives); or (ii) use, directly or indirectly, export-controlled items, software, or technology in any application involving a military use, missile technology, nuclear proliferation/nuclear explosive device, chemical and biological weapons proliferation. For purposes of this Article, Foreign National means any person who is neither a United States citizen, nor a Lawful Permanent Resident (i.e., Green Card holder, (8 USC 1101(a)(20))), nor other Protected Individual under the Immigration and Naturalization Act (8 USC 1324b(a)(3)) designated as an asylee, refugee, or a temporary resident under amnesty provisions. A Foreign National also means any foreign corporation, business association, partnership, or any other entity or group that is not incorporated to do business in the United States. c) Consultant will insert a similar export control provision, as included in this Article, in any agreement through which it intends to transfer to third parties any export-controlled items, software, or technology that Consultant acquired from Company; provided, however, that Consultant shall be solely responsible for its and such third parties compliance with the Export Control Laws. d) The obligations set forth in this Article shall survive the expiration or termination of this Contract and shall apply so long as the applicable Export Control Laws remain in effect. e) In the event of any ambiguity or inconsistency between the export control provisions of this Article and any other Article of this Contract, this Article shall be controlling. CA_rev06/01/16 8

97 SCHEDULE MCM-EE PAGE 9 OF Compliance with Laws and Required Authorizations. Consultant has complied with, and has caused all subcontractors and other persons for whom Consultant is responsible to comply with, all federal, state and local laws, statutes, ordinances, codes, regulations, rules, orders, and resolutions of all Governmental Authorities relating to the performance of the Work and the transactions contemplated by this Agreement, including, without limitation, environmental, health, safety, building, information security and employment laws. The Consultant shall not violate any laws or regulations in the performance of the Work and has all necessary authorizations, approvals and consents to perform such Work. Consultant shall defend, indemnify and hold harmless the Company against any actual or alleged violation of said laws or regulations or failure to obtain authorizations, except where violation or failure is due to the Company s sole negligence or intentional misconduct. 2.4 Independent Contractor. Consultant s status shall be that of Independent Contractor, and the Consultant shall not, for any reason or purpose, be deemed to be an agent, partner or employee of the Company and shall not represent that it is authorized to act in representative capacity as regards the Company. Consultant shall have full responsibility for all withholding, payroll or other taxes of any kind arising out of the Work. Company shall rely on the organization, management, skill, cooperation and efficiency of the Consultant to provide the intended Work conforming to the Agreement within the scheduled times. Consultant shall, at all times, be fully responsible for its acts or omissions, as well as those of its employees and subcontractors. Any general superintendence, inspection, review, coordination, monitoring or oversight by the Company or the exercise of any of the Company s rights under this Agreement shall not relieve the Consultant of any of its responsibilities under this Agreement. 2.5 Co-employment. Consultant shall be the employer in law and in fact of all persons assigned to perform Work pursuant to this Agreement. Consultant shall take all necessary efforts and precautions to protect Company from co-employment status, including taking any and all steps necessary or prudent to ensure compliance with any laws, rules or regulations regarding coemployment. Consultant agrees to indemnify and hold Company, its parent, affiliates, divisions, subsidiaries, successors, assigns, directors, officers and employees harmless form any and all liabilities, damages, expenses, court costs, attorneys fees, costs and any direct or consequential damages whatsoever resulting from any finding of co-employment with respect to any of its personnel having performed Work for the Company. 2.6 Equal Employment Opportunity/Affirmative Action / Employee Protection. Consultant is in compliance with all of the laws and Executive Orders prohibiting discrimination, including, but not limited to, Title VII of the Civil Rights Act of 1964 as amended, the Age Discrimination in Employment Act, the Americans With Disabilities Act, and their state law counterparts. Consultant and its subcontractors shall abide by the requirements of 41 CFR (a), (a) and (a) (for construction contractors, 41 CFR (a)). Consultant does not discriminate against qualified individuals based on their status as protected veterans or individuals with disabilities, and does not discriminate against individuals based on their race, color, religion, sex, sexual orientation, gender identity or national origin. Moreover, Consultant and its subcontractors take affirmative action to employ and advance in employment individuals without regard to race, color, religion, sex, sexual orientation, gender identity, national CA_rev06/01/16 9

98 SCHEDULE MCM-EE PAGE 10 OF 25 origin, protected veteran status or disability. Consultant also agrees to comply with the provisions of 29 C.F.R. Part 471, Appendix A to Subpart A, as applicable. (Applicable to Work Performed at Nuclear Facilities) Consultant shall be familiar with Section 211, "Employee Protection," of the Energy Reorganization Act of 1974, 42 USC 5851, as amended; Title 10 of the CFR Section 50.7, "Protection of Employees Who Provide Information"; and 29 CFR Part 24, hereinafter "Whistleblower Provisions." Consultant shall become familiar, and comply in every way, with Company s requirements regarding Safety Conscious Work Environment, as applicable. Consultant shall implement a program and develop procedures to advise all employees that they are entitled and encouraged to raise safety concerns to Consultant s management, to the Company, and to any applicable regulatory agency, without fear of discharge or other discrimination. In the event any allegation is made to the Consultant by an employee of discriminatory acts prohibited by the Whistleblower Provisions or any indication that an employee intends to seek or has sought a remedy under the Whistleblower Provisions before the Department of Labor or applicable regulatory agency, Consultant shall notify the Company both verbally and by Written Notice within two (2) business days thereof. In the event of any dispute between Consultant and one of its employees about compensation, terms, conditions, or privileges of employment, Consultant agrees that it will not permit any provision in a resulting settlement agreement to hinder or discourage any employee from notifying any applicable regulatory agency of any matter within the scope of its regulatory authority. Consultant further agrees that, prior to signing any settlement agreement arising out of any dispute that directly affects safe plant operation; it will submit the proposed agreement to the Company for review. 2.7 Subcontractors. Consultant shall bind every subcontractor to the terms and provision in this Agreement as is applicable to its Work. 3. COMPANY COVENANTS 3.1 Company Information. Any documents, reports or information provided to the Consultant shall be for informational purposes only, unless stated otherwise in a written document signed by an authorized Company representative. 4. CONSULTANT COVENANTS Consultant agrees to accept, receive or hold information, whether in oral, written or physical form, which is confidential or proprietary, in the manner set forth in that certain separate Confidentiality and Non-Disclosure Agreement ( NDA ) executed between the Parties on, the terms of which shall survive any termination or expiration of this Agreement. 4.1 Conflicts of Interest. Consultant shall not undertake to perform any services for other persons or entities that will prevent Consultant from performing the Work to be provided to Company. Consultant shall not enter into any business relationship, engage in any commercial transaction, or take part in any proceeding, legal or otherwise, that creates a conflict of interest or impropriety. Where a potential conflict of interest or impropriety exists, Consultant shall promptly disclose and discuss said conflict or impropriety with Company. CA_rev06/01/16 10

99 SCHEDULE MCM-EE PAGE 11 OF Insurance. 1. Prior to the start of Work, Consultant shall at its own expense, procure and maintain in effect during performance and until final completion and acceptance of any Work under the Agreement, the following minimum insurance coverage with carriers acceptable to Company including: a. Workers Compensation insurance in accordance with statutory limits, as required by the state in which the Work is to be performed, and Employer s Liability insurance with limits of not less than one million dollars ($1,000,000) per occurrence. b. Commercial General Liability insurance (occurrence form) providing coverage for premises, bodily injury, property damage, personal injury, advertising injury, if applicable, blanket contractual liability, covering Consultant s obligations under this Contract, products and completed operations for not less than three (3) years from the date the Company accepts the Work, coverage for independent contractors and broad form property damage coverage with limits of not less than one million dollars ($1,000,000) for each occurrence with an annual aggregate of three million dollars ($3,000,000) per project or per location where Work is performed. c. Commercial Automobile Liability insurance providing coverage for all owned, non-owned, and hired automobiles used by the Consultant in the performance of the Work with a combined single limit of not less than one million dollars ($1,000,000) for each occurrence of bodily injury and property damage. d. Excess or Umbrella Liability insurance with a limit of not less than five million dollars ($5,000,000) for each occurrence with an annual aggregate of five million dollars ($5,000,000) per project or per location where the Work is performed. This limit applies in excess of each of the coverage set forth above in paragraphs 1.a (Employer s Liability), 1.b (Commercial General Liability insurance), and 1.c (Commercial Automobile Liability insurance), which are scheduled as primary. e. Pollution/Environmental Liability insurance with a minimum limit of five million dollars ($5,000,000) each occurrence where the Work involves or includes Consultant handling, transporting, disposing, or performing work or operations with hazardous substances, contaminates, waste, toxic materials, or any potential pollutants. f. Professional Liability insurance with a minimum limit of five million dollars ($5,000,000) per claim where the Work involves or includes Consultant providing or performing design, engineering, consulting, or any professional services. If Consultant is providing software development, systems development or outsourced systems the insurance shall include cover for liability arising from intellectual property infringement, information technology and software development services (add in specific services provided by the Consultant). g. If the Work involves privacy and network security aspects that involve access to personally identifiable data, the following insurance shall be provided: Computer Security and Privacy Liability insurance with a minimum limit of ten million dollars ($10,000,000) per claim covering actual or alleged acts, errors or omissions committed by the Consultant, its agents or CA_rev06/01/16 11

100 SCHEDULE MCM-EE PAGE 12 OF 25 employees. The policy shall also extend to include the intentional, fraudulent or criminal acts of the Consultant, its agents or employees. The policy shall expressly provide, but not be limited to, coverage for the following perils; (i) unauthorized use/access of a computer system, (ii) defense of any regulatory action involving a breach of privacy, (iii) failure to protect confidential information (personal and commercial information) from disclosure, (iv) notification costs, whether or not required by statute. If the policy is subject to an aggregate limit, the aggregate limit shall be per project or per location where Work is performed. h. The Insurance coverage to be provided by Consultant under this Agreement shall not include any of the following; except for Professional Liability, any claims made insurance policies; any self-insured retention or deductible amount greater than two hundred fifty thousand dollars ($250,000) unless approved in writing by Company. For self-insurance approved by the Company, the Company retains the right at any time after its written approval of self-insurance, to require that Consultant provide commercial insurance as required by the terms of this Agreement. In such case, the Company will provide Consultant written notice of its requirement that Consultant supply a commercial insurance policy consistent with the terms of this Agreement. Within 10 days of the Company s written request, Consultant shall provide Company of evidence of insurance as required by this Agreement. The insurance coverage provided under this Agreement shall not contain any restrictions or limitations which are inconsistent with the Company s rights under the Agreement. i. If any insurance is provided on a claims-made basis, the Consultant shall maintain continuous insurance coverage during the term of this Agreement and in addition to the coverage requirements above, such policy shall provide that; (i) policy retroactive date coincides with or precedes the insured s initial services under the Agreement (including subsequent policies purchased as renewals or replacements), (ii) policy allows for reporting of circumstances or incidents that might give rise to future claims, (iii) Consultant shall maintain similar insurance for at least three (3) years following completion of the Work, including the requirement of adding Company as an additional insured, and (iv) if insurance is terminated for any reason, Consultant agrees to purchase an extended reporting provision of at least three (3) years to report claims arising from work performed in connection with this Agreement. j. All above-mentioned insurance policies shall provide the following; be primary to any other insurance or self-insurance carried by the Company; contain standard cross-liability provisions; and provide for a waiver of all rights of subrogation against the Company by Consultant and its insurers. 2. Additional Coverage Company reserves the right at any time, including after the Work has begun, to require Consultant to procure and maintain additional coverage or limits and Consultant shall furnish such additional insurance or limits and the associated increase, if any, in premium paid by the Consultant shall be reimbursed by the Company at cost without mark-up. 3. Additional Insured Endorsement All liability insurance policies shall name the Company and its successors and assigns, as additional insured and Consultant shall maintain the required coverage, naming the Company CA_rev06/01/16 12

101 CA_rev06/01/16 13 SCHEDULE MCM-EE PAGE 13 OF 25 as an additional insured, for a period of not less than three (3) years from the date the Company accepts the Work. 4. Evidence of Insurance Prior to the start of any Work, Consultant shall deliver to the Company s Supply Chain Representative evidence of the required insurance coverage in the form of Certificates of Insurance acceptable to Company. The Certificates of Insurance and the insurance policies required by this Agreement shall contain a provision that coverage afforded under the policies will not be canceled, allowed to expire or the limits in any manner reduced, until at least thirty (30) days prior written notice, ten (10) days written notice in the case of nonpayment of premium, has been given to Company. Company may inspect any or all policies of insurance at any time. 5. Ratings All insurance coverage required under the Agreement shall be provided by insurance companies acceptable to Company and having ratings of A-/VII or better in the Best s Key Rating Insurance Guide (latest edition in effect at the latest date stated in the Certificates of Insurance referred to in paragraph 4 above (Evidence of Insurance). 6. Failure to Obtain and Maintain Insurance Failure to obtain and maintain the insurance required under the Agreement shall constitute a material breach of the Agreement and Consultant will be liable for any and all costs, liabilities, and damages, (including attorney s fees, court costs, and settlement expenses) resulting to Company from such breach. In the event Consultant fails to provide the required insurance, Company may at its option, procure said insurance at Consultant s expense. 7. Consultant s Obligations Not Limited The insurance requirements set forth above are to protect the Company from any and all claims by third parties, including employees of the Consultant, its agents, subcontractors and invitees. Said insurance, however, is in no manner to relieve or release Consultant, its agents, subcontractors and invitees from, or limit their liability as to, any and all obligations assumed under the Agreement. 8. Work Performed at Nuclear Facilities (Limit use to Work at Salem or Hope Creek) In the case of Work to be provided at the Company s Salem or Hope Creek Nuclear Generating Stations, located at Lower Alloways Creek Twp, the Company shall, as required by law, maintain and continue to maintain, until the decommissioning of individual nuclear plants, a nuclear insurance and indemnification program for the plant which includes protection for its vendors, contractors, suppliers, and subcontractors as follows: Nuclear Liability Insurance with American Nuclear Insurers (ANI Policy No.MF-90) and Mutual Atomic Energy Liability Underwriters (MAELU Policy No. NNF-230) to the maximum limit available (presently $300,000,000) and an Indemnity Agreement (No. B-74)

102 CA_rev06/01/16 14 SCHEDULE MCM-EE PAGE 14 OF 25 with the NRC pursuant to Subsections 170(b) and 170(c) of the Atomic Energy Act of 1954, as amended, as well as all other requirements of the Act. The Insurance is omnibus in nature and defines the insured as: (a) the named insured; and (b) any other person or organization with respect to legal responsibility for bodily injury or property damage resulting from a nuclear incident. Nuclear Property Insurance which includes all contractors and subcontractors as their interests may appear and also provides an automatic waiver of subrogation provision prior to a loss. 4.3 Reporting Minority and Women Owned Business Enterprises ( MWBE ). The Company is committed to increasing the amount of business placed with MWBE firms. The Consultant is encouraged to utilize MWBE firms wherever possible in connection with providing the Work. If the Consultant elects to utilize an MWBE business in connection with the Work, the Consultant shall notify the Company thereof, specifying in such notice (i) the name of the MWBE business, (ii) whether or not such business is certified as a minority or women-owned business by a certifying agency and if so, the name of the certifying agency, (iii) the services provided to the Consultant, and (iv) the amount paid for the Work. 4.4 Standards of Integrity. In the performance of any activities related to the Work, Consultant, and its employees, shall adhere at all times to the provisions contained in PSEG's Standards of Integrity, which can be found on its website, or in booklet form upon request. In conjunction therewith, Consultant and its employees may be required to complete a Certification of Compliance if they are deemed to be involved in duties related to procurement activities, such as the selection or evaluation of bidders; contract administration activities; or, have access to what the Company regards as Confidential Information, as specified in the NDA. If the NDA is inapplicable, Confidential Information is information in any form that is disclosed and provided by PSEG to the Consultant, including, but not limited to: business secrets, business information, business plans, financial and pricing information, business practices, financial statements and reports, project specifications, projections, schematics and drawings, trade secrets, processes, materials, customer lists, supplier lists, sales volume, territories, markets, current, future or potential acquisitions, technical, production, operational, marketing or sales information or any and all other financial, business, organizational and technological information related to Company s business and/or organization, whether or not such information is specifically marked Confidential. It includes all writings, notes, memoranda, media (collectively, Notes ) made by Consultant with respect to such Confidential Information. 4.5 Information Security. 1. Consultant s Red Flag Policies and Procedures. Consultant has established policies and procedures to identify indications of possible identity theft risks, sometimes known as red flags ( Red Flags ) to Company s customers or employees that may arise in the performance of the Work on behalf of the Company. 2. Privacy and Data Protection. Consultant shall hold any information it receives regarding Company s (and/or its affiliates and related companies) customers and employees in trust and confidence and comply with all Company requests and requirements pertaining to such employee or customer related information in accordance with all federal and state laws and regulations, including, but not limited to, privacy laws (such as HIPPA, Fair & Accurate Credit Transaction Act and Gramm Leach Bliley Safeguard Rule and similar state laws)

103 CA_rev06/01/16 15 SCHEDULE MCM-EE PAGE 15 OF 25 and privacy regulations (such as Federal Trade commission identity theft regulations and state identity theft regulations). 3. Notification, Mitigation and Indemnification. In the event that Consultant discloses or becomes aware that Consultant has experienced a security breach with respect to any information pertaining to any Company employee or customer in violation of this Agreement, any Company requests or requirements, or applicable laws and regulations, the Consultant shall immediately: (i) notify Company if Consultant becomes aware or has reason to believe that a disclosure or breach of security has occurred, (ii) take steps to mitigate such disclosure, (iii) assist the Company to make customer or employee disclosures required by applicable laws and regulations and (iv) pay to the Company all of the Company s costs and expenses associated with the Company s compliance obligations under applicable laws and regulations. 4. Confirmation. Consultant shall deliver to the Company its written confirmation of Consultant s compliance with the provisions of this article upon Company request. 4.6 Registration as Company Supplier. Consultant, at its sole cost and expense, shall register as a Company supplier through any supplier portal designated by Company within ten (10) business days of Company s request to do so and shall provide updated information upon Company s request as a condition of continuing qualification to perform Work for Company. 5. PERFORMANCE OF WORK 5.1 Changes and Extras. Company shall have the right during the progress of the Work to order extra Work and to make alterations, additions, omissions, deletions, modifications, changes or departures in the scope, schedule, sequence, method or performance of the Work, or make any other changes without invalidating this Agreement and Consultant shall effect all such changes. If said changes increase or decrease the cost of the Work, the compensation will be adjusted accordingly on a prorated basis. The Consultant shall not perform extra Work nor incur any extra cost or expense unless a written request for said extra Work, cost or expense shall have been obtained from the Company prior to the performance of such extra Work or incurring any extra cost or expense. 5.2 Company Option to Accept Defective/Non-Conforming Work. (a) The Company may, at its sole discretion but without any duty or obligation, accept defective Work, or Work that does not strictly conform to the Agreement. In such event, payment shall be reduced by the reasonable costs to the Company of removing and correcting such defective/non-conforming Work, regardless of whether final payment has been made or the defective/non-conforming Work be replaced or corrected. The Company may use such reduction of costs as a credit to remedy the foregoing at a time and in a manner that is convenient to the Company. 5.3 Work Schedule. The Consultant shall keep the Company advised as to the progress and schedule of the Work. The Company shall have the right to require Consultant to provide a schedule. Where the Consultant believes the occurrence of any event or any act or omission by any person or entity (including by the Company or its employees or others) will or may delay the Work or increase the cost, the Consultant shall provide verbal notification to be followed by written notice to the Company within three business days of the occurrence of said event, act or omission. Said written notice shall specify the nature and cause of the actual or potential delay, cost or expense increase to the Work, as well as the expected length of delay or expected

104 SCHEDULE MCM-EE PAGE 16 OF 25 increase in cost or expense. Consultant shall at all times conduct its Work and cooperate with all others so as to mitigate any possible interference with the Company s operations. 5.4 Suspension of Work. The Company shall at all times have the right, without cost, expense or prejudice to any other of its rights or remedies, to temporarily suspend the performance of the Work, in whole or in part, for its convenience by giving written notice to the Consultant. The written notice shall state the extent, effective date and expected duration of the suspension. 5.5 Safety. The Consultant shall protect the safety of persons and property in the performance of the Work, and Consultant shall defend, indemnify and hold harmless the Company against any actual or alleged personal injury or property damage arising out of the Consultant s performance of the Work except where due to the Company s sole negligence or intentional misconduct. 6. OWNERSHIP OF WORK 6.1 Ownership of Work. All Work shall constitute works made for hire, and the ownership of such Work, including all copyrights, patents or other intellectual property rights shall be vested in the Company. Where the Consultant has preexisting copyrights, patents or other intellectual property rights that are provided as part of the Work, the Company shall have a perpetual, royalty-free, non-exclusive license to use the Work, including any derivative works developed by the Company. 6.2 Non-Exclusivity. The Parties acknowledge that Consultant s Work for the Company is provided on a non-exclusive basis and that Consultant is free to provide services to other persons or entities provided said services to other persons or entities do not create a conflict of interest or appearance of impropriety (as detailed in Article 4.1 Conflicts of Interest), or do not interfere with Consultant s satisfactory and timely performance of the Work. 7. PAYMENTS AND INVOICING 7.1 Payments. The terms and amount of payment shall be in accordance with Exhibit B Payment Schedule, or in accordance with a Purchase Order. 7.2 Invoicing. Unless otherwise specified herein, Consultant shall provide Company with one monthly bill for all Work. Company will not be obligated to pay Consultant if an invoice is received more than sixty (60) calendar days after any Work has been performed. Each invoice shall include a description of the task performed as part of the Work and the time spent for each task. 7.3 Reimbursement for Inappropriate Payments/Setoff. If at any time the Company has been overcharged under this Agreement, the Company shall be entitled to a refund, setoff, or withholding. Any payments made by the Company for the Work performed by unqualified persons or entities shall be reimbursed to the Company. All claims for money due or which becomes due from the Company shall be subject to deduction or setoff by the Company by reason of any claim arising out of this Agreement or any other transaction with Consultant. CA_rev06/01/16 16

105 SCHEDULE MCM-EE PAGE 17 OF Acceptance and Waiver. Consultant s acceptance, by endorsement or otherwise, of final payment shall constitute a waiver of any Claim against the Company except for those pending Claims previously made in writing, in accordance with this Agreement, to the Company. No payment or acceptance, final or otherwise, shall constitute acceptance by the Company of defective or otherwise non-conforming Work. 7.5 Taxes. To the extent the Work under this Agreement may be either exempt from taxation under the New Jersey Sales and Use Tax Law, or taxable to the Company, the Company shall issue the necessary exemption or direct payment certificates to Consultant, as appropriate. In no event, however, shall the Company be responsible, or reimburse Consultant, for any corporate franchise, net income, or local taxes imposed upon it for the general privilege of doing business. 8. DELAYS AND EXTENSIONS OF TIME 8.1 Time Of The Essence. Time is of the essence as to the observance, performance, and fulfillment of Consultant s duties, obligations, and responsibilities to the Company. 8.2 Extensions of Time. The Work schedule shall only be changed for the following causes, and then only to the extent such causes are unforeseeable and beyond Consultant s reasonable control: (i) if Consultant is delayed at any time in the progress of the Work by an improper act or neglect of the Company, (ii) by material changes ordered in the Work by the Company that cause an actual delay, (iii) acts of God (such as tornado, hurricane, flood, etc.), (iv) strikes, lockouts and other unexpected labor disturbances, civil disorders, acts of terrorism, acts of civil or military authority or (v) unusually severe and unfavorable weather conditions. In all such above-referenced events, the Work shall be extended by the Company in writing for such amount of time as the Company reasonably determines is necessary to compensate for such delay, but only if all the following conditions are satisfied: (a) the delay relates to an activity that, during the period of delay, is deemed by the Company to be a critical component of the Work and is not reasonably susceptible to being made up; (b) (c) within 48 hours after Consultant becomes aware of the event or condition causing the delay, Consultant delivers Notice to the Company describing in detail such event or condition and the actual delay expected to result from said cause; and Consultant has provided the Company with all updated schedules required by this Agreement and has made available all pertinent documentation requested by the Company relating to the delay or request for extension. No change in Consultant s compensation or payment shall be made by reason of a request for extension of time. 9. AUDIT RIGHTS 9.1 Maintenance of Records. For any Work performed hereunder, Consultant shall keep a detailed account of all costs necessary for proper financial management with a system in accordance with Generally Accepted Accounting Procedures, consistently applied and of Consultant s CA_rev06/01/16 17

106 CA_rev06/01/16 18 SCHEDULE MCM-EE PAGE 18 OF 25 compliance with the provisions of Article 4.5. Maintaining proper records shall not relieve Consultant of its responsibility to properly document all invoices submitted for payment. 9.2 Company Rights. Company, including its agents or employees, shall have access to the Work and to all of Consultant s books, vouchers, memoranda, records, data, and other documents relative to the Work, for inspection, audit, or reproduction. Company shall have access to the unique employee identification numbers and payroll records of Consultant s employees and subcontractors performing Work under this Contract. Company agrees to maintain such identification numbers in confidence to the extent required by law. Consultant shall preserve all of the above records for six years after final payment, during which time the Company shall have the right to perform any audit, inspection, or reproduction it may desire. If discrepancies or questions arise, the records shall be preserved until an agreement is reached between Company and Consultant. The Company reserves the right to recover any overcharges or incorrect charges from Consultant Expense. Any audit conducted by the Company shall be at its expense except that if it is determined that Consultant incorrectly charged the Company or that Consultant has failed to comply with the provisions of Article 4.5, the Consultant shall be liable to Company for all charges, including the amount of the overcharge or incorrect charge and cost of audit or other investigation, including reasonable costs and attorneys fees incurred in collection of such charges Time of Audit. Audits shall take place at times and places to be mutually agreed except that if the Parties cannot agree, audits shall take place at such place and at such times as the Company may reasonably require. Consultant shall make all Work-related records and data that Company identifies available to Company in electronic format within 10 days, upon Company s request. 10. LIENS In consideration of any payments made to Consultant, Consultant waives any lien rights against the Company and shall immediately defend, indemnify and hold harmless the Company against any liens or lien claims and discharge any liens or lien claims brought against the Company premised upon the Consultant s actual or alleged nonpayment of subcontractors or suppliers of any tier. 11. WARRANTY Consultant shall provide all Work with a high degree of care, skill, diligence, professional knowledge, judgment and expertise, according to sound work practices and accepted professional and industry standards, in a well-managed, organized and efficient manner, and to the entire satisfaction of the Company. Consultant warrants that all Work provided by the Consultant shall be of high quality, free from any defects, suitable for the purposes for which it was intended, complies with all applicable laws, regulations, standards and codes; does not violate any patent, copyright, trade secret or other proprietary interests; and otherwise fully conforms in all respects to the Agreement. Consultant shall promptly correct or re-perform nonconforming Work at the Company s request at no charge. 12. LIMITATION OF LIABILITIES THE COMPANY S TOTAL LIABILITY TO THE CONSULTANT FOR ALL CLAIMS OR SUITS OF ANY KIND, WHETHER BASED UPON AGREEMENT, TORT (INCLUDING NEGLIGENCE), WARRANTY, STRICT LIABILITY, OR OTHERWISE, FOR ANY LOSSES, DAMAGES, COSTS

107 CA_rev06/01/16 19 SCHEDULE MCM-EE PAGE 19 OF 25 OR EXPENSES OF ANY KIND WHATSOEVER ARISING OUT OF, RESULTING FROM, OR RELATED TO THE PERFORMANCE OR BREACH OF THIS AGREEMENT SHALL, UNDER NO CIRCUMSTANCES, EXCEED THE AGREEMENT PRICE, AS MAY BE AMENDED IN WRITING. THE COMPANY SHALL NOT, UNDER ANY CIRCUMSTANCES, BE LIABLE FOR ANY SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL LOSSES, DAMAGES, COSTS OR EXPENSES WHATSOEVER. ANY ACTION AGAINST THE COMPANY ARISING OUT OF, RESULTING FROM OR RELATED TO THE PERFORMANCE OR BREACH OF THIS AGREEMENT SHALL BE FILED NOT LATER THAN ONE YEAR AFTER THE CAUSE OF ACTION HAS ACCRUED. 13. INDEMNIFICATION Consultant hereby agrees to defend, indemnify, save and hold harmless the Company, as well as its affiliates, owners, directors, officers, employees and agents (each an Indemnified Person ) from and against any and all claims, damages, losses and expenses, on an after-tax basis, including, without limitation, reasonable attorneys fees, disbursements, awards, fines and judgments imposed on, asserted against or incurred by any Indemnified Person in any way relating to, or arising out of, in connection with or resulting from the following: (i)any inaccuracy of any representation or warranty when made by the Consultant herein; (ii) a failure of Consultant to perform any covenant, obligation or agreement hereunder or under any related agreement; (iii)consultant s failure to pay any amounts that have become due and owing from Consultant to any Subcontractor or other entity; (iv)any and all claims that any item provided or used by Consultant infringes upon, misappropriates or violates a patent, copyright, or other intellectual property right or proprietary interest; (v) the death or bodily injury to persons, and; (vi)injury or damage to property, destruction of tangible property or the use thereof, to the extent caused by any negligent act or omission, including, without limitation, negligent design, of Consultant, Consultant s employees, agents, suppliers, subcontractors and/or anyone for whose acts the Consultant may be liable. This indemnification shall survive the expiration or sooner termination of this Agreement. 14. TERM AND TERMINATION 14.1 Term. The term of this Agreement shall commence on the Effective Date set forth above and end one year from the Effective Date (the Term ), at which time all Work will conclude, unless the Term is extended by mutual written agreement by the Parties. This Agreement, however, is subject to earlier termination by Company, at its discretion, with or without cause, upon prior written notice to Consultant as set forth herein Termination. The Parties acknowledge that the nature of consulting services in general, as well as the Work to be performed hereunder, are personal services involving personal satisfaction with a high degree of subjectivity and individual judgment. As such, the Company shall have the absolute right and discretion to terminate this Agreement based upon its judgment, with or without cause. However, the Company shall give seven days prior written notice to the Consultant of its election to terminate, at which time any fees and expenses due and owing to the Consultant under this Agreement shall be invoiced. On the effective date of Termination pursuant to this Section, Consultant shall: stop the terminated Work on the date, and, to the extent specified in the Notice of termination, place no further orders or Subcontracts except as may be (A) required to complete portions of the Work not terminated, or (B) directed by the Company; perform, at rates or on terms not to exceed those in this Agreement, any

108 SCHEDULE MCM-EE PAGE 20 OF 25 incidental or close-out work necessary, as directed by the Company, to ensure that the Company receives the full use and benefit of any Work provided prior to termination, including the provision of any and all information or documentation; to the extent possible, transfer title and possession of all terminated Work, either partially or completely performed, and complete all Work, if any, that was not terminated, provided, however, that such transfer shall not constitute acceptance of non-conforming Work; execute and deliver all such papers and take all such steps, including the legal assignment of Consultant s contractual rights, as Company may request, for the purpose of fully vesting in it the rights and benefits of the Consultant under such obligations or commitments; promptly comply with the Company s instructions and continue to perform and fully complete all Work that has not been terminated; and keep the Company fully informed about all actions taken or intended to be taken as a result of the termination. 15. MISCELLANEOUS 15.1 Advertising. Consultant or its employees or agents shall not use the Company s name, photographs, logo, trademark or other identifying characteristics or that of any of Company s subsidiaries or affiliates without Company s prior written approval Assignment. Consultant shall not subcontract or otherwise assign its rights or obligations under this Agreement or any part thereof to any other person or entity without the prior written consent of the Company Notices. All notices or other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given if delivered by electronic transmission, overnight delivery service or personally, otherwise any such notice or other communication shall be deemed to have been duly given five days after mailing if sent by certified or registered mail, return receipt requested. Any and all notices shall be addressed as follows: If to Company: Copy to: If to Consultant: Vice President Procurement PSEG Services Corporation 80 Park Plaza, T6 Newark, New Jersey Telephone: Fax: [Client, address, telephone & fax] Telephone: Fax: Any Party may change the address to which notices or other communications are to be sent to it by giving written notice of such change in the manner provided herein. CA_rev06/01/16 20

109 SCHEDULE MCM-EE PAGE 21 OF Waiver. Company s failure to insist in any one or more instances upon strict performance of any provision of the Agreement, or failure or delay to take advantage of any of its rights or remedies hereunder, or failure to notify Consultant of any breach, violation or default, shall not be construed as a waiver by Company of any such performance, provision, right, breach, violation or default, either then or for the future. Any waiver shall be effective only if in writing and signed by Company s authorized representative, and only with respect to the particular case expressly covered in that writing No Third Party Beneficiaries. The Parties to this Agreement are the only Parties to this Agreement, and there are no third party beneficiaries to this Agreement Law and Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey, without regard to principles governing conflict of laws, and any claims or suits arising out of this Agreement shall be litigated in New Jersey. If Consultant does not have a registered agent located in New Jersey, Consultant consents, in the event a suit is filed, to service by registered mail, return receipt requested, upon any corporate officer at its principal place of business or registered office. The Parties agree that prior to commencing any legal action relating to or arising from this Agreement and/or the underlying transaction, the Parties will attempt in good faith to resolve any issues by discussions and negotiations to be agreed upon by the Parties Headings. The headings assigned to the Articles of this Agreement are for convenience only and shall not limit the scope and applicability of the Articles Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute an original, but all of which together shall constitute one instrument Entire Agreement. This Agreement constitutes the full, complete and only agreement between the Parties hereto with respect to the Work. This Agreement supercedes any course of performance, course of dealings, usage of trade, previous agreements, representations and understandings, either oral or written. No terms, conditions, agreements, representations, understandings, course of performance, course of dealing or usage of trade purporting to modify, vary, supplement, expand or amend any provisions of this Agreement shall be effective unless in writing, signed by a Company representative authorized to amend this Agreement. Only corporate officers and procurement analysts are authorized to execute documents on behalf of the Company. WHEREFORE, the Parties hereto have caused this Agreement to be executed by their duly authorized agents. PSEG SERVICES CORPORATION By: By: (Signature) (Signature) Name: CA_rev06/01/16 21 Name:

110 SCHEDULE MCM-EE PAGE 22 OF 25 (Printed) Title: Date: (Printed) Title: Date: CA_rev06/01/16 22

111 SCHEDULE MCM-EE PAGE 23 OF 25 EXHIBIT A SCOPE OF WORK Insert a description of the work to be done CA_rev06/01/16 23

112 SCHEDULE MCM-EE PAGE 24 OF 25 EXHIBIT B PAYMENT SCHEDULE Insert outline of various rates and/or flat rate pricing 1. Consultant shall submit signed invoices monthly, in a form and manner (including supporting data and documentation) that is in full conformity with this Agreement. Consultant shall separately itemize hours expended during the preceding month and the applicable hourly rate, if appropriate under this Agreement. Other expenses shall be itemized separately on each Invoice. Payment of invoices shall be due within thirty (30) days after receipt of approved applications. 2. Signed Invoices will be deemed Consultant s representation that the Work for which payment is requested has been provided in full conformity with the Agreement. No progress payment, or any use of the Work by the Company, shall be deemed to constitute the Company s acceptance of non-conforming Work. 3. Clear title to all Work covered by an Invoice shall pass to Company no later than at the time of payment. 4. a) Overtime and Travel Time: Unless otherwise specified in further detail herein, no payment shall be made for time and expense for travel, meals or accommodations. All time shall be invoiced at the same rate, regardless of the days or hours worked, unless otherwise detailed herein. b) If Consultant is performing Work on a cost-plus fee basis, the Company may reimburse Consultant at cost, without fee or mark-up, the cost of: taxes, travel, hotel accommodations, fees paid to Subcontractors doing Work on a cost-plus basis (which fees shall not exceed the percentage fee paid to the Consultant), permit or licensing fees, royalties, insurance premiums, photocopying, long-distance telephone toll charges, postage and messenger service that are paid directly by the Consultant and approved as necessary in writing by the Company, in accordance with Company policy. Unless otherwise agreed to herein, the cost of computer time shall not be billed to the Company. c) For Work performed on a time and material basis, the hourly rate(s) specified in this Agreement shall incorporate all overheads, and Company shall not be billed for word processing, computer, and secretarial or clerical time. Company shall reimburse Consultant for necessary photocopying, toll calls, fax transmissions, mailing, or other costs as may be approved by the Company in advance. Travel expenses, meals, and accommodations shall not be charged to the Company unless agreed to prior to any such expense being incurred. No commuting expenses shall be charged to the Company. CA_rev06/01/16 24

113 SCHEDULE MCM-EE PAGE 25 OF 25 EXHIBIT C REQUIRED BACKGROUND CHECKS STANDARD FULL SCOPE= A through M A. Social Security Number verification or equivalent verification if outside the United States (country specific) with address history B. Criminal history records check Federal for the past seven years, (or outside of US equivalent) C. Criminal history records check In state(s) of residence for the past seven years D. Criminal history records check In county/counties of residence for the past 7 years E. Government (Terrorist) Watch List F. Employment verification (last seven years) G. Education verification (highest degree) H. Professional license and/or certification verification (if applicable to position requirements) I. Driver s license abstract (if applicable to position) J. Credit profile, including Bankruptcy & Liens K. Media search L. Drug screening [test for use of defined Controlled Dangerous Substances that is equal to the US Code of Federal Regulations Title 49: Transportation, Part 40 Procedures for Transportation Workplace Drug and Alcohol Testing Programs M. Sexual Offender check N. Any other verification required by law, rule or regulation [ Specify] O. Any other verification deemed appropriate by Company [Specify] STANDARD MEDIUM SCOPE = A, B, C, D, E, L, M STANDARD LOW SCOPE = A, B, C, D, E, M CA_rev06/01/16 25

114 PSE&G Hospital Efficiency Program SCHEDULE MCM-EE [Insert Project Name] PAGE 1 of 18 PSE&G Hospital Efficiency Program MASTER CUSTOMER AGREEMENT Date_[ ] CUSTOMER'S FULL CORPORATE NAME AND ADDRESS: Dear : Public Service Electric & Gas Company ("PSE&G") has performed a review of a Customer Application ( Application ) submitted under the PSE&G Hospital Efficiency Program by: (the Customer ) for the Customer s premises and facilities located at (collectively, the Facility ). PSE&G has also performed a creditworthiness review of Customer s PSE&G utility bill account(s) and participation in PSE&G s Hospital Efficiency Program (the Program ) is contingent upon Customer having and maintaining an acceptable PSE&G utility bill payment record. PSE&G will perform an energy audit (the Audit ) of the Facility to determine if Customer may benefit from participating in the Program upon Customer s submittal of this executed Hospital Efficiency Program Master Customer Agreement (the Master Customer Agreement ) to PSE&G. The Audit is free to all Program applicants. The Customer has completed, executed and delivered to PSE&G, the Customer Application and Customer Access Consent Agreement dated. The Audit is the primary mechanism to identify energy efficiency investment opportunities to systems such as lighting, HVAC, steam systems, insulation, building envelope, motor and others that are appropriate and cost effective; (each an Energy Conservation Measure or ECM collectively, the Energy Conservation Measures or ECMs ) that meet a 15 year or better simple payback period (the Payback Period ). The parties acknowledge and agree that they are entering into this Master Customer Agreement in order to set forth their agreement regarding performance of the Audit and the installation of the ECMs at the Customer s Facility. 1. During the course of conducting the Audit, PSE&G and its engineering contractors will perform an on-site detailed inspection of the Facility to assess the current and historical pattern of energy usage ("Baseline") against which energy savings to be obtained from the EEE EXT II Ver. 4.0 SLR 6/16/16

115 PSE&G Hospital Efficiency Program SCHEDULE MCM-EE [Insert Project Name] PAGE 2 of 18 implementation of the ECMs shall be measured. Customer acknowledges and agrees that it will provide for PSE&G's review and analysis all documentation and data including, without limitation, utility bills and historic operating equipment data reasonably requested by PSE&G to evaluate the Customer's current operations and the cost effectiveness of the implementation of various energy efficiency strategies. Any withholding or misrepresentation of such documentation and data may result in an inaccurate Baseline and jeopardize the Project (as defined below), funding and/or Customer s participation in the Program. PSE&G's evaluation activities will include, without limitation, a detailed visual inspection of the Facility and operating systems and such other activities or measurements as PSE&G determines in its sole discretion to be needed to establish a Baseline for the Facility. 2. PSE&G will review and submit a copy of the Audit Report to the Customer, identifying those ECMs that PSE&G has preliminarily determined, based on the Audit recommendations, to be eligible under the Program for installation at the Customer s Facility. PSE&G and Customer will meet to review the Audit and agree upon any proposed ECMs (the Project ). Customer will then execute a Limited Notice to Proceed I Project Engineering Phase, a sample copy of which is attached as Exhibit I, agreeing to proceed with the engineering phase of the Program. PSE&G s engineering vendor will provide technical assistance in the form of an engineering analysis to determine the ECMs eligible under the Program, in the design phase, for installation as applicable and will develop the engineering and design drawings and documents (bid-ready construction documents) required to develop a description of the work to be performed (scope of work) to obtain price quotations for implementation of the agreed upon ECMs. If Customer chooses not to proceed with Program participation after the Engineering Phase of the Program has begun or has been completed, Customer will be responsible to reimburse PSE&G 100% of all costs associated with that work and those costs will become immediately due and payable to PSE&G. If the Customer chooses to proceed with Program participation after the Engineering Phase of the Program has been completed, Customer will then execute a Limited Notice to Proceed Letter II Scope of Work and Contractor Bid Phase, a sample copy of which is attached as Exhibit II, agreeing to proceed with the scope of work and solicitation of contractor bids phase of the Program. 3. The Customer will submit the contractor proposal(s) (the "Proposal") to PSE&G for construction of the Project, which specifies the ECMs that Customer proposes to install, and the proposed costs to be incurred for the installation thereof. PSE&G will evaluate the cost effectiveness of the Proposal by determining, (in addition to other criteria), the Payback Period based on installation cost estimates submitted by Customer and will approve the cost estimates and the annual energy savings determined by PSE&G in its sole discretion. PSE&G, in its sole discretion, will determine which ECMs it will fund through this Program. The Program will consider all relevant Project costs including the cost of the proposed ECMs, Project Engineering and construction management, if any (collectively, the Total Project Costs ). Note that the cost of the Audit shall be included in all Project analysis and reporting, however, it is not included in calculating the Total Project Cost or Customer s Share. However, in determining the amount to be funded to the Customer and the amount to be repaid by the Customer, PSE&G will review the cost of (i) the installation of ECMs including construction management, if any ( ECM EEE EXT II Ver. 4.0 SLR 6/16/16

116 PSE&G Hospital Efficiency Program SCHEDULE MCM-EE [Insert Project Name] PAGE 3 of 18 Costs ), and (ii) Project Engineering ( Engineering Costs, and together with ECM Costs, the "Approved Project Costs"). Note that PSE&G pays its third party engineering vendors directly for the Engineering Costs. The Approved Project Costs do not include the cost of the Audit which is free to Program participants. 4. Once PSE&G has approved the Project, PSE&G and Customer will enter into an agreement funding the installation costs of the ECMs (the Customer Repayment Agreement"), a copy of which is attached as Exhibit III. The Customer shall have fourteen (14) days from receipt of the Customer Repayment Agreement in which to review, execute and return the Customer Repayment Agreement to PSE&G for countersignature. Failure of the Customer to return the executed Customer Repayment Agreement may result in the Customer s Project being moved to the end of PSE&G s review queue and as a result of the number of Program applicants and limited Program funding available, Customer may lose funding for its Project. 5. PSE&G s Financial Commitment: All funding will be provided in accordance with the terms and conditions of this Master Customer Agreement. PSE&G will advance funds pursuant to and in accordance with Section 8 but in no event in excess of one hundred percent (100%) of the Approved Project Costs. PSE&G s permanent financial incentive (the "PSE&G Permanent Financial Incentive") shall equal the amount which is required to reduce the Customer s payback period for the Project by buying down the payback period by not more than six (6) years, to a period of not less than three (3) years. All Approved Project Costs in excess of the PSE&G Permanent Financial Incentive (the Customer's Share") shall be recaptured by PSE&G from the Customer following completion of the Project over a five (5) year period (the "Recovery Period") by means of a monthly charge to the Customer through a monthly PSE&G Hospital Efficiency Program bill, in an amount sufficient to fully amortize repayment of the principal amount of the Customer s Share over the Recovery Period. PSE&G shall not charge and the Customer shall not pay any interest on the Customer s Share. Customer shall construct and own the Project, however, the Customer acknowledges and agrees that PSE&G is required by the New Jersey Board of Public Utilities ( NJ BPU ) to own the rights to all energy savings and to bid all energy efficiency attributes derived as a result of PSE&G s Hospital Program into the PJM Capacity Market or any other markets that monetize the value of the energy savings attributable to ECMs (refer to Section 13). 6. The Customer shall notify PSE&G when the Customer has signed a construction contract (the "Construction Contract") with the Customer's prime contractor(s), and shall provide a copy(s) of each of the signed Construction Contract(s) to PSE&G. Customer shall enter into the Construction Contract with a prime contractor(s) or issue purchase orders ( POs ) for the requisite labor, materials and/or services, as the case may be, within 60 days of receipt of bids, provided that the pricing and energy savings for same continue to meet the Program requirements. 7. The Customer shall deliver or cause to be delivered in a timely manner copies of all approved applications and certificates for payment (i.e., invoices) submitted by the Customer s contractor(s). The Customer shall also submit upon request, in a timely manner, an accounting of all payments made to the contractor(s) or material suppliers. EEE EXT II Ver. 4.0 SLR 6/16/16

117 PSE&G Hospital Efficiency Program SCHEDULE MCM-EE [Insert Project Name] PAGE 4 of Progress Payments: PSE&G shall fund the ECM costs in multiple payments in not less than three stages of progress during the course of the Project. The Customer acknowledges and agrees that only those ECMs that have been approved by PSE&G shall be eligible for funding under this Program and with regard to those ECMs no work has commenced, nor materials purchased prior to the execution of the Customer Repayment Agreement. A. The three stages of the Program progress payments are: 1. Stage One - Execution of Contract: PSE&G will pay to the Customer the initial progress payment equal to 30% of the ECM Costs (the Stage One Initial Payment ) when each of the following conditions have been satisfied: (1) the Customer has committed to install all of the agreed-upon ECMs by delivering to PSE&G: (i) executed Construction Contracts with the prime contractor(s) or issuance of POs for the purchase of labor, materials and/or services; (ii) confirmation that (a) 100% of the Project has acceptable bids and no less than 75% have been contracted for by firm, fixed price contracts or (b) a guaranteed maximum price contract has been issued by the contractors covering the installation of the ECMs; (iii) a construction schedule; (iv) a firm start date has been agreed upon; and (v) all required permits have been identified; (2) Customer has executed the Customer Repayment Agreement; (3) PSE&G has reviewed the Customer s Construction Contract and/or POs along with any such other documentation necessary or useful in its review; (4) approval in PSE&G s sole discretion that the ECMs to be installed conform to and are consistent with the ECMs identified in the Audit, and are consistent with and conform to the approved Project; and (5) Customer has requested the Stage One Initial Payment. 2. Stage Two Progress Payments (the Stage Two Progress Payments ): PSE&G will pay to the Customer as set forth below the Stage Two Progress Payments equal to 50% of the ECM Costs. As the Project proceeds and as the Customer requests additional funding, supported by contractor invoices, engineering inspections and periodic PSE&G site inspections, and PSE&G is satisfied in its sole discretion that installation of the ECMs is satisfactorily progressing or complete, PSE&G shall pay to the Customer the Stage Two - Progress Payments which may be in a single payment or in a series of payments. Prior to PSE&G releasing payments to the Customer, which in the aggregate exceed one-half (1/2) of the ECM Costs committed to in the Customer Repayment Agreement, including Stage 1 Initial Payment and Stage 2 Interim Payments, the Customer shall deliver to PSE&G such documents, contracts, purchase orders and the like verifying that 100% of the Project, including all ECMs, and construction management, if any, have been bought out with firm, fixed price contracts through the completion of the Project. The Customer shall deliver any and all required documents that PSE&G may need, in its sole discretion, to confirm the progress in order to be eligible to receive the Stage Two - Progress Payments. Documentation may include construction progress, purchase and delivery receipts of major equipment, approved contractor requisitions for payment, inspection reports or such other evidence relevant to the Project and requested funding. 3. Stage Three Final Payment: PSE&G shall make the final progress payment (the Stage Three - Final Payment ) when the Project has achieved Final Completion as defined in this EEE EXT II Ver. 4.0 SLR 6/16/16

118 PSE&G Hospital Efficiency Program SCHEDULE MCM-EE [Insert Project Name] PAGE 5 of 18 Section 8.A.3. The Stage Three Final Payment shall be equal to approximately 20% of the ECM Costs, subject to adjustment in the Cost True-Up as defined below. For purposes herein, Final Completion means that (i) all punch list items have been completed, (ii) all commissioning has been successfully completed, (iii) the Customer shall have use of the ECMs for the purposes for which they were installed (collectively, Beneficial Use ) and (iv) the Customer has approved the final invoice(s) reflecting that the Project is one hundred percent (100%) complete (collectively, Final Completion ). After the Customer notifies PSE&G that the Project has achieved Final Completion, PSE&G will perform a final inspection on all work performed (the Final Inspection ). If the Project passes the Final Inspection, the amount of the Approved Project Costs will be trued-up (the Cost True- Up ) based on actual costs incurred. If the actual ECM Costs are less than the approved ECM Costs the Stage Three - Final Payment will be adjusted down to reflect the actual costs set forth in the Cost True-Up. If the actual ECM Costs are equal to or greater than the approved ECM Costs, the Stage Three - Final Payment will not be adjusted and will be paid according to the ECM Costs set forth in the Customer Repayment Agreement. After the Cost True-Up has been completed, PSE&G will pay to the Customer the Stage Three - Final Payment as determined above within 30 days of the later to occur of (1) the Customer delivering executed copies of all project close-out documents required by PSE&G or (2) receipt by PSE&G of all final engineering reports. Project close-out documents shall include but not be limited to (a) Letter of Completion, a sample copy of which is attached hereto as Exhibit IV, which shall include the Cost True-Up which the Customer executes and acknowledges receipt thereof, and (b) final engineering reports including Certification of Completion, Commissioning Report, the Final Inspection Report, and Supplement #2 which the engineer delivers to PSE&G. In addition, the Stage Three-Final Payment shall also be conditioned upon the delivery to PSE&G of all items set forth on the closing checklist, including but not limited to construction documents, ECM data from the project engineer for reporting purposes, all contracts with prime contractors as well as and to the extent applicable certificates of final inspection and acceptance or approval, and the like issued by the applicable governmental code inspector(s). The parties acknowledge and agree that PSE&G shall not under any circumstances be required to make an aggregate payment in excess of the original Approved Project Costs. The Cost True-Up includes, but is not limited to the review of all Project expenses, invoices, contracts, agreements, receipts of inventory and such documents or other information necessary for proper financial management, consistently applied or as deemed necessary by PSE&G in its sole discretion to identify, calculate and audit all actual Project expenditures. Maintaining proper records shall not relieve Customer of its responsibility to properly document all invoices submitted to PSE&G in connection with the Cost True-Up. All equipment or materials, payroll documents, records and time sheet data used to prepare invoices shall be maintained in an electronic native file format. All Project close-out documents shall be provided to PSE&G within thirty (30) days of the Final Inspection. Following receipt of these various close-out documents by PSE&G, the Project is considered complete and the Customer repayments will begin within thirty (30) days thereof. Customer s failure to provide all required documents within thirty (30) days will result in the withholding of the final payment to the Customer, however and in all events, the Customer billing for the repayment of the Customer s Share of the Approved Project Costs will begin EEE EXT II Ver. 4.0 SLR 6/16/16

119 PSE&G Hospital Efficiency Program SCHEDULE MCM-EE [Insert Project Name] PAGE 6 of 18 within 30 days of the earlier to occur of (i) the Project Completion Date as defined in the Customer Repayment Agreement or (ii) Final Inspection. B. Customer Guarantee of Final Completion Date: The Customer warrants and guarantees to PSE&G that the Project shall achieve Final Completion not later than the date set forth in detail in the executed Customer Repayment Agreement ( Final Completion Date ). Customer further warrants and guarantees to PSE&G (i) that Customer shall require the Customer s contractor(s) to guaranty that Final Completion shall occur on or before the Final Completion Date (the Customer Contractor Guaranty ), and (ii) to secure performance of the Customer Contractor Guaranty the Customer s contractor(s) shall be required by the Customer to furnish bonds equal in amount to 30% of the aggregate ECM Costs, covering the faithful performance of the Customer Contractor Guaranty and the payment of all obligations arising thereunder, in such form as the Customer may prescribe, and with such sureties as it may approve. All of the Construction Contracts related to the Project shall recognize PSE&G as a third-party beneficiary for the limited purpose of enforcing the Customer Contractor Guaranty. All performance or payment bonds (each a Bond ) required hereunder shall be assignable to PSE&G and each Bond shall contain a provision affirming that such Bond shall be assigned to PSE&G for the purposes of enforcing remedies available to Customer under such Bond if Final Completion is not achieved by the Final Completion Date. In the event that additional cost is incurred in completing the Project, such as in the case of the Customer substituting one contractor(s) for another, the Customer shall remain responsible to pay any cost increase as a result thereof and regardless of any remedies available under the bond. If PSE&G determines in its sole discretion that the Project has not achieved Final Completion on or before the Final Completion Date, notwithstanding any other provision herein, PSE&G may declare the Customer s Share immediately due and payable and retain the Stage Three - Final Payment that would otherwise have been due to the Customer and apply it to the repayment of the Customer s Share. If at any time before or after the Final Completion Date, PSE&G in its sole discretion determines that the Customer has failed to diligently pursue completion of the Project, PSE&G shall deliver written notice thereof to the Customer, which notice shall specify a date certain by which the Project shall be completed. If the Customer thereafter fails to complete the Project to PSE&G s satisfaction by the date certain specified in PSE&G s written notice, PSE&G may declare the Customer s Share immediately due and payable, retain the Stage Three Final Payment that would otherwise have been due to the Customer and apply it to the repayment of the Customer s Share. To the extent that any amount of the Customer s Share remains unpaid after application of the Stage Three Final Payment, such amount shall be immediately due and payable to PSE&G. 9. The Customer shall notify PSE&G when installation of the ECMs has commenced. At its discretion, PSE&G may, upon reasonable notice to the Customer, inspect the Project site during various intervals. Inspections shall be conducted at a time mutually agreeable to PSE&G and the Customer. The Customer shall notify PSE&G as installation progresses and additional funding is desired so that PSE&G and/or its representative may observe the progress of installation at that time to determine eligibility for Stage Two - Progress Payments. The Customer shall also notify PSE&G when construction of the Project achieves Final Completion so that PSE&G may inspect and approve the Project in conjunction with completing the Cost True-Up for the purpose of establishing the Customer's eligibility to receive the Stage Three - EEE EXT II Ver. 4.0 SLR 6/16/16

120 PSE&G Hospital Efficiency Program SCHEDULE MCM-EE [Insert Project Name] PAGE 7 of 18 Final Payment. PSE&G shall make a reasonable effort to perform the Final Inspection for the Project within thirty (30) business days after the Customer serves notice on PSE&G that the Project is ready for the inspection. The Final Inspection shall be performed at a time or times mutually agreeable to PSE&G and the Customer. The Final Inspection may be conducted in a single or a series of on-site, detailed inspections of the Project as determined by PSE&G in its discretion, and shall include, without limitation, a visual inspection of all areas and systems associated with the Project. PSE&G, with the Customer s assistance, may maintain records of energy usage and inspection results for the purpose of evaluating the effectiveness of the Project, and for calculation of the Payback Period. In the event that after conducting the Final Inspection PSE&G approves the Project installation, PSE&G shall pay the balance of the Stage Three Final Payment, subject to the Cost True-Up and as set forth in Section 8.A.3 above. In the event that after conducting the Final Inspection, PSE&G disapproves the Project installation, PSE&G shall provide the Customer with written notice specifying the reasons for its disapproval. The Customer shall have fourteen (14) days to submit a written plan to PSE&G to remedy (the "Remedial Plan") the deficiencies specified by PSE&G. PSE&G shall have fourteen (14) days following receipt of Customer's Remedial Plan to review and approve or disapprove the Remedial Plan. If PSE&G disapproves the Remedial Plan, PSE&G may terminate this Master Customer Agreement by delivering written notice of its intent to terminate to the Customer and PSE&G shall have no further liability hereunder. PSE&G shall provide the Customer with written notice specifying the reasons for its disapproval. Any monies (progress payments, engineering costs, etc.) previously paid to Customer shall become immediately due and payable to PSE&G. If the Remedial Plan is approved by PSE&G, the Customer shall implement and complete the Remedial Plan within six (6) months following approval thereof by PSE&G. If the Remedial Plan is not susceptible of being implemented and completed within six (6) months, the Customer shall undertake diligent efforts in good faith within such six (6) month period to implement and complete the Remedial Plan; provided, however, that notwithstanding any provisions contained in this Master Customer Agreement to the contrary, PSE&G may terminate this Master Customer Agreement in writing to Customer and have no further liability hereunder if the Remedial Plan is not fully implemented and completed within six (6) months following approval thereof by PSE&G. Any monies (progress payments, engineering costs, etc.) previously paid to Customer shall become immediately due and payable to PSE&G. The Stage Three Final Payment, shall not be payable by PSE&G unless and until the Project achieves Final Completion. 10. Default: A. Each of the following events shall constitute an "Event of Default : (a) Customer fails to repay any portion of the Customer s Share when due under this Master Customer Agreement; (b) Customer fails to observe or perform any covenant or agreement to be observed or performed by Customer hereunder; (c) the Facility or Customer s interest therein is sold or transferred in violation of Section 11; (d) Customer or any guarantor of this Master Customer Agreement ceases doing business as a going concern or makes an assignment for the benefit of creditors; (e) Customer or any guarantor hereunder commences or has commenced against it any insolvency or bankruptcy proceeding or has its affairs placed in the hands of a receiver, trustee, or assignee for the benefit of creditors; (f) any financial or credit information submitted by or on behalf of Customer shall prove to have been false or misleading in any material respect when submitted; (g) any representation or warranty made by or on behalf of Customer shall prove to EEE EXT II Ver. 4.0 SLR 6/16/16

121 PSE&G Hospital Efficiency Program SCHEDULE MCM-EE [Insert Project Name] PAGE 8 of 18 have been false or misleading in any material respect when made; (h) a default shall occur under any other obligation Customer owes to PSE&G; (i) any indebtedness Customer may now or hereafter owe to PSE&G shall be accelerated or, if any such indebtedness is payable on demand, payment thereof shall be demanded; or (j) the Customer shall assign or attempts to assign, including an assignment or attempt to assign for collateral purposes, this Master Customer Agreement or any right or obligation hereunder in violation of Section 29 (collectively an Event of Default ). B. PSE&G Remedies for a Customer Default: upon written notice of an Event of Default from PSE&G to the Customer the Customer shall have thirty (30) days from the date of such notification, or such other additional period of time PSE&G may approve, in which to cure such default to PSE&G's entire satisfaction. Should Customer fail to cure such default, PSE&G may at any time thereafter, upon notice to the Customer, terminate this Master Customer Agreement and declare the Customer s Share immediately due and payable. If after applying any Stage Three Final Payment to reimburse PSE&G for (i) the Customer s Share and then (ii) for any damages PSE&G incurred as a result of the Customer s default, any remaining and unpaid amounts shall be immediately due and payable to PSE&G by the Customer. 11. Sale or Transfer of Property: The Customer must provide PSE&G with ninety (90) days advance written notice of a change of ownership, change of billing account information, or if a customer of record modification is made to the billing account. If the Facility or any portion thereof, including property or any improvements thereupon, or any of Customer s ownership interest in the Facility, direct or otherwise, is sold or transferred during the course of the Project, including during the Recovery Period, without PSE&G s prior written consent, the full amount of the outstanding balance of the Customer s Share due to PSE&G shall become immediately due and payable. 12. The Customer shall at all times use diligent efforts and act in good faith in advancing the progress of the Project toward completion. Upon the earlier to occur of (i) the date of Final Completion or (ii) the date on which the Customer has Beneficial Use of the ECMs and regardless of progress toward Final Inspection and project close-out, the Customer s Share shall become due and payable and shall be repaid as set forth in Section 8.A.3 and 8.B above. 13. The NJ BPU requires that PSE&G participate in the PJM Capacity Market* through the demand reductions achieved by the ECMs installed as part of this Program. The Customer acknowledges and agrees that, for purposes of participating in the PJM Capacity Market, PSE&G shall own the rights to all such demand reductions without cost or obligation to the Customer. PSE&G s ownership of the Project s demand reductions does not affect the Customer s ownership of the ECMs nor the energy savings derived from the ECMs. As required by PJM, PSE&G reserves the right to perform measurement and verification ( M&V ) at all participating facilities. PSE&G M&V activities at the Facility may, in PSE&G s sole discretion, include but not be limited to, meter installation, calibration and maintenance of M&V equipment, data gathering and screening, verification of M&V reports and the use of customer energy and cost savings, and billing information. PSE&G will notify the Customer if an ECM installed at the Facility requires M&V, will inform the Customer of the PSE&G M&V EEE EXT II Ver. 4.0 SLR 6/16/16

122 PSE&G Hospital Efficiency Program SCHEDULE MCM-EE [Insert Project Name] PAGE 9 of 18 activities, and will work with the Customer to minimize any adverse effects on the Customer s normal operations. PSE&G, or its subcontractor, may audit the Facility to verify the operation of all installed ECMs for up to four (4) years following installation to ensure compliance with PJM Capacity Market rules and regulations. The Customer shall cooperate with and support PSE&G s ownership of the Demand Reductions as set forth in this Section 13. *PJM Capacity Market PJM Interconnection is the regional transmission operator (RTO) that coordinates the movement of wholesale electricity in all or parts of 13 states including New Jersey. PJM operates a competitive wholesale electricity market and manages the high-voltage electricity grid to ensure reliability for more than 61 million people. PJM holds regular capacity auctions to ensure there is sufficient generating capacity available to meet customer needs. Load reductions from ECMs are allowed to participate in these auctions as negative generation. PSE&G is required to offer the Demand Reductions achieved through PSE&G s energy efficiency programs into the PJM Capacity Auctions. The Customer will own the ECMs installed as part of the Project, as well as recognize the ECM energy and/or cost savings, however they may not offer the Demand Reductions into the PJM Capacity Market. 14. The Customer understands and agrees that for purposes of preliminary and ongoing energy analysis and benchmarking its Facility data and energy consumption history may be entered into the Energy Star Portfolio Manager Database or such other appropriate benchmarking database. The Customer may have access to the information once the data is entered. 15. If the Work to be performed qualifies as a public work under the New Jersey State Prevailing Wage Act, N.J.S.A. 34: et seq. (the Act ), Contractor shall be required to adhere to and comply with all aspects of the Act applicable to the Contractor as a result of this Contract and shall require the same of its subcontractors. The Contractor must use the job classification that most closely aligns to the work being performed. Work subject to the prevailing wage requirement is any work associated with the installation of energy savings measures, (e.g. marketing and analysis activities for the project are excluded). If the Work falls under the jurisdiction of the New Jersey Division of Property Management and Construction, Contractor must comply with and require its subcontractors to comply with all requirements of that agency and any related statutes and regulations. If the Work to be performed qualifies as a Utility Construction Project, Contractor agrees that it or its Subcontractors currently are or will become signatory to a labor agreement with IBEW Local 94 or to a Construction Industry Association form of collective bargaining agreement with an IBEW A Local or the appropriate represented workers skilled in construction industry trades and crafts. All labor provided by or on behalf of the Contractor in connection with the work on Projects that do not qualify as a public work as defined by the Act or a Utility Construction Project, shall be performed by union craft paid in accordance with the union contract or by non-union employees paid at a rate equivalent to the prevailing wage for the county in which the work is to be performed using the job classification that most closely aligns to the work being performed. EEE EXT II Ver. 4.0 SLR 6/16/16

123 PSE&G Hospital Efficiency Program SCHEDULE MCM-EE [Insert Project Name] PAGE 10 of Incentives: Customer represents and warrants to PSE&G that the Customer has not received or applied for incentives or services for the same ECMs from another utility, state, or local program. 17. Property Rights: Customer represents that it has the right to install the ECMs on the Facility on which the ECMs are to be installed and that any necessary consents have been obtained. 18. Term and Termination: A. Term. The term of this Master Customer Agreement shall not exceed the term of the Program, or the availability of funds provided by PSE&G to pay for the Program services. B. Termination Without Cause. Either the Customer or PSE&G may terminate this Agreement at any time by providing the other party with thirty (30) days advance written notification, provided however, that if the Customer terminates participation, Customer shall reimburse PSE&G in full for all Project Costs PSE&G has incurred to date of Customer s termination and PSE&G may retain any payments that would otherwise have been due to the Customer. C. In the event of (i) a sale or transfer of all or part of the Facility and/or Customer s ownership interest therein, (ii) bankruptcy, insolvency or liquidation of Customer or (iii) forced shut down of Customer s operations and/or the Facility, PSE&G s rights to capture and monitor energy savings shall survive. 19. The relationship of PSE&G and Customer shall be that of independent parties and neither this Master Customer Agreement nor anything done pursuant to this Master Customer Agreement or any other document prepared, completed or entered into in pursuant to, in connection with or as a result of this Master Customer Agreement shall be deemed to create any partnership, joint venture, agency or other relationship between PSE&G and Customer. 20. This Master Customer Agreement is intended for the sole benefit of the parties and there are not third party beneficiaries, express or implied, to this Master Customer Agreement. 21. PSE&G shall consider all information furnished by Customer to be confidential and shall not disclose any such information to any other person, or use such information itself for any purpose other than in connection with and as set forth in this Master Customer Agreement and any subsequent agreements contemplated by the parties hereunder without the Customer s prior written consent. The Customer shall consider all information furnished by PSE&G to be confidential and shall not disclose any such information to any other person, or use such information itself for any purpose other than in connection with and as set forth in this Master Customer Agreement and any subsequent agreements contemplated by the parties hereunder without PSE&G s prior written consent; provided, however, either party may disclose such information as may be required to be disclosed by law or court order from a court of competent jurisdiction, and provided further that, unless otherwise prohibited by law, the party whose information is required to be disclosed is given reasonable time to take legal action to quash such EEE EXT II Ver. 4.0 SLR 6/16/16

124 PSE&G Hospital Efficiency Program SCHEDULE MCM-EE [Insert Project Name] PAGE 11 of 18 action and seek other protection. The Customer expressly understands and agrees that this Master Customer Agreement is entered into in connection with and is subject to the Program, and PSE&G is required to: 1) Report all program data including customer specific information to the NJ regulators on a periodic basis ( Regulatory Reporting ), and 2) Prepare a Program evaluation report (the Program Evaluation Report ) and submit it to the NJ regulators. The Customer expressly further understands and agrees that both the Regulatory Reporting and the Program Evaluation Report may, among other participant and Project information, identify the Program participants by name and Project address, identify the ECMs implemented by each Program participant and the energy and cost savings achieved by each Program participant. 22. Customer will provide PSE&G with any existing information concerning the Project, the operational systems and costs, Customer s operation and maintenance practices, Facility expansion/renovation plans (both short- and long-range) as well as any other available information which reasonably relates to the services to be undertaken by PSE&G ("PSE&G's Services") pursuant to this Master Customer Agreement. Customer will also provide PSE&G with access to the Project and the operating systems upon reasonable advance notice. Customer will be the primary contact for assisting PSE&G in connection with PSE&G's Services, and PSE&G will rely on the accuracy and completeness of the information furnished by Customer as contemplated herein. PSE&G and Customer will otherwise cooperate with each other in connection with PSE&G's Services. 23. This Master Customer Agreement shall not be amended, modified or otherwise altered, except pursuant to a written agreement signed by the parties. 24. This Master Customer Agreement, together with the Customer Access Consent Agreement, constitutes the full, complete and only agreement between the parties hereto with respect to the foregoing and supersedes any previous agreements, representations or undertakings, either oral or written. 25. This Master Customer Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of New Jersey. Any legal claim, suit, proceeding, or action not settled by mediation shall be brought in New Jersey state courts or, if the claim, suit, proceeding or action is to be brought in Federal Court, in the United States Court, District of New Jersey. By execution and delivery of this Master Customer Agreement, each of the parties hereby accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts and appellate courts. Each of the parties hereby irrevocably consents to the service of process of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof to it by registered or certified mail, postage prepaid, return receipt requested, to its address set forth herein. Each of the parties hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any such action or proceeding in such respective jurisdictions. To the extent permitted by applicable law, each of the parties hereby irrevocably waives all right of trial by jury in any action, proceeding, or counterclaim arising out of or in connection with this Master Customer Agreement or any matter arising hereunder. 26. LIMITATION OF LIABILITY: IN NO EVENT WILL PSE&G OR ITS OFFICERS, DIRECTORS, AGENTS, EMPLOYEES, CONTRACTORS OR SUBCONTRACTORS OF EEE EXT II Ver. 4.0 SLR 6/16/16

125 PSE&G Hospital Efficiency Program SCHEDULE MCM-EE [Insert Project Name] PAGE 12 of 18 ANY TIER BE LIABLE FOR ANY LOSSES, DAMAGES, COSTS OR EXPENSES HOWEVER CAUSED, ARISING FROM THIS MASTER CUSTOMER AGREEMENT. PSE&G SHALL NOT, UNDER ANY CIRCUMSTANCES, BE LIABLE FOR ANY SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL LOSSES, DAMAGES, COSTS, OR EXPENSES WHATSOEVER (INCLUDING FOR LOST PROFITS, TIME OR REVENUE) FOR ANYTHING ARISING OUT OF THE PERFORMANCE OR NONPERFORMANCE OF THIS MASTER CUSTOMER AGREEMENT, WHETHER CLAIMS FOR SAID LOSSES OR DAMAGES ARE PREMISED ON WARRANTY, NEGLIGENCE, STRICT LIABILITY, CONTRACT OR OTHERWISE. ANY ACTION AGAINST PSE&G ARISING OUT OF, RESULTING FROM, OR RELATED TO THE PERFORMANCE OR BREACH OF THIS MASTER CUSTOMER AGREEMENT SHALL BE FILED NO LATER THAN ONE (1) YEAR AFTER THE CAUSE OF ACTION HAS OCCURRED. THE PROVISIONS OF THIS SECTION 26 SHALL SURVIVE TERMINATION OR EXPIRATION OF THIS MASTER CUSTOMER AGREEMENT. 27. The Customer shall defend, indemnify and hold harmless PSE&G and all of its officers, directors, agents, employees, contractors or subcontractors of any tier from and against all claims, damages, losses, and expenses, including but not limited to attorneys fees, in any way arising out of or resulting from the performance of the Customer under this Master Customer Agreement, the existence or condition of the Project, including but not limited to claims, damages, losses and expenses related to (a) personal injury, death, or occupational disease of any person (including, but not limited to, any of the Contractor s or any Subcontractor s employees or agents); (b) loss or damage to any real or personal property; (c) the use, operation, or possession of any equipment or materials; (d) the nature or condition of the Facility; or (e) the Customer s, its contractor s or any subcontractor s failure to provide adequate preventative and protective measures, safeguards or devices. The Customer s obligation to defend, indemnify, and hold harmless under the provisions of this Section shall exclude only those instances which are the result of PSE&G s sole negligence. The Customer expressly acknowledges that the parties are contractually allocating these risks to the Customer and Customer has procured and shall maintain for the term of this Master Customer Agreement insurance coverage for the purpose of providing a financial means to support this indemnification provision. For purposes of fulfilling its duties to defend, indemnify, and hold harmless PSE&G and all of its officers, directors, agents, employees, contractors or subcontractors of any tier, the Customer waives the immunities, rights and defenses which may be available under applicable workers compensation laws. 28. It is expressly understood and agreed that PSE&G makes no warranty and assumes no responsibility, expressed or implied, for the condition, performance, maintenance, manufacture, or design of the Audit, the ECMs, the construction of the Project or the calculation of payback periods. PSE&G MAKES NO REPRESENTATIONS AND DISCLAIMS ANY WARRANTY, WHETHER STATUTORY, WRITTEN, ORAL, EXPRESS, OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR ARISING OUT OF ANY COURSE OF DEALING OR USAGE OF TRADE. THE CUSTOMER ACKNOWLEDGES AND AGREES THAT PSE&G DOES NOT GUARANTY THAT THE CUSTOMER WILL ACHIEVE ANY ENERGY SAVINGS FROM THE PROJECT, AND THAT THE ACTUAL ENERGY SAVINGS THAT THE CUSTOMER ACHIEVES WILL BE AFFECTED BY MANY FACTORS THAT CANNOT BE EEE EXT II Ver. 4.0 SLR 6/16/16

126 PSE&G Hospital Efficiency Program SCHEDULE MCM-EE [Insert Project Name] PAGE 13 of 18 PREDICTED WITH PRECISION SUCH AS THE ACTUAL HOURS OF OPERATION AND THE SPECIFIC OPERATING CONDITIONS PRESENT IN THE FACILITY. Any information provided by PSE&G, which relates to the Audit, the ECMs, the Project, or the calculation of payback periods, shall be for informational purposes only and shall not be guaranteed or warranted. 29. Assignment: Customer shall not assign this Master Customer Agreement to any other party without the express prior written consent of PSE&G, which consent may be withheld in PSE&G's sole and absolute discretion. PSE&G has the unrestricted right to assign any or all of its rights, remedies or obligations under this Master Customer Agreement. Anything to the contrary notwithstanding, the Customer may assign, via an assignment and assumption agreement in form acceptable to PSE&G and executed by all parties to the transaction, this Master Customer Agreement to a purchaser of all or substantially all of the Customer s assets and/or the Facility with the prior written consent of PSE&G, which consent shall not be unreasonably withheld. 30. Counterparts: This Master Customer Agreement may be executed by the parties hereto on separate counterparts each of which when executed and delivered shall be deemed to be an original and all of which taken together shall constitute one and the same instrument. If you agree to the terms set forth in this Master Customer Agreement, please so indicate by signing and returning to PSE&G two (2) original copies of this Master Customer Agreement executed below where indicated. Public Service Electric & Gas Company By: Name: Title: Acknowledged, accepted and agreed this day of,, 2016 CUSTOMER S FULL LEGAL NAME By: Printed Name: Title: EEE EXT II Ver. 4.0 SLR 6/16/16

127 PSE&G Hospital Efficiency Program SCHEDULE MCM-EE [Insert Project Name] PAGE 14 of 18 Acknowledged, accepted and agreed this day of,, 2016 EEE EXT II Ver. 4.0 SLR 6/16/16

128 PSE&G Hospital Efficiency Program SCHEDULE MCM-EE [Insert Project Name] PAGE 15 of 18 EXHIBIT I Limited Notice to Proceed I Project Engineering Phase (see attached) EEE EXT II Ver. 4.0 SLR 6/16/16

129 PSE&G Hospital Efficiency Program SCHEDULE MCM-EE [Insert Project Name] PAGE 16 of 18 EXHIBIT II Limited Notice to Proceed II Scope of Work and Contractor Bid Phase (see attached) EEE EXT II Ver. 4.0 SLR 6/16/16

130 PSE&G Hospital Efficiency Program SCHEDULE MCM-EE [Insert Project Name] PAGE 17 of 18 EXHIBIT III Customer Repayment Agreement (see attached) EEE EXT II Ver. 4.0 SLR 6/16/16

131 PSE&G Hospital Efficiency Program SCHEDULE MCM-EE [Insert Project Name] PAGE 18 of 18 EXHIBIT IV Letter of Completion (see attached) EEE EXT II Ver. 4.0 SLR 6/16/16

132 SCHEDULE MCM-EE PAGE 1 OF 7 PSE&G Direct Install Program for Government and Non-Profit Facilities and Small Businesses located in UEZs Customer Contract (Terms & Conditions) INSTALLATION AND REPAYMENT AGREEMENT Contact Name: Date: Facility Name: Facility Address: PSE&G Account #: Town, State, and Zip Code: TrakSmart ID: Phone: Phone # 2: Audit Date: Facility Sq. Footage: Auditing Firm: Auditor: This Installation and repayment Agreement is entered into by and between Public Service Electric and Gas Company (the "Company" or PSE&G ) and [insert Customer name] (the "Customer") and Landlord (if the energy conservation measures (ECMs) are to be installed at the Landlord s property), each individually referred to as a Party and collectively referred to as the Parties. Public Service Electric and Gas Company is offering an energy conservation program (the Program ) to customers in its electric and/or gas service territory ( Customer ), that are government or non-profit entities with annual peak demands equal to or less than 200 kw. The Program is also offered to small business customers with annual peak demands equal to or less than 200 kw, that are located in an Urban Enterprise Zone (UEZ). The Customer is the Company s customer of record, i.e. the PSE&G electric and/or gas account holder. Under the Program, the Company is arranging the installation of certain energy conservation measures ( ECMs ) at eligible Customer government/non-profit/small business facilities (the Facility). This Direct Install Program for Government/Non-Profit/Small Business Facilities Customer Contract Installation and Repayment Agreement (the Agreement ) is entered into by and between PSE&G and [inset Customer name] as of [insert date of Agreement]. Customer agrees (a) to have the Company or its designee install the ECMs and (b) to pay a portion of the installation cost as described in Paragraph 6 listed below. The following are Terms and Conditions that govern the Program and the installation of the ECMs: 1. ECMs to be Installed EEE EXT II Ver. 3.0 SLR 6/16/16

133 SCHEDULE MCM-EE PAGE 2 OF 7 The Company, (or the Company through its designated Contractor) will install at Customer s facility the ECMs described in Paragraph 6 below. The Company shall permanently disable all lamps replaced pursuant to this Agreement (make them unfit for reuse). The Company shall dispose of all materials including fluorescent ballasts and lamps, old fixtures and HVAC/refrigeration equipment. 2. Installation Date The Company will use commercially reasonable efforts to install the ECMs within thirty (30) days of Customer signing this Agreement. 3. Warranty and Disclaimers (a) The Company will provide a one-time replacement free of charge for any equipment that fails to operate according to manufacturer s specifications for a period of one (1) year after the date of the original installation. (b) Customer may have other warranty rights that may have been provided by the manufacturer of the devices installed under this Agreement. Customer, however, may exercise such rights only against the manufacturer, and not against the Company or its affiliates. The Company shall use commercially reasonable effort to assist the Customer s efforts to enforce the manufacturer warranties. (c) OTHER THAN THE REPLACEMENT WARRANTY STATED IN SUBPARAGRAPH 3(a) ABOVE, NEITHER THE COMPANY NOR ITS AFFILIATES MAKE ANY WARRANTIES OF ANY KIND, INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. (d) THE COMPANY DOES NOT GUARANTEE THAT THE ECMS WILL, IN FACT, SAVE ANY LEVEL OF ENERGY OR RESULT IN A LOWERING OF CUSTOMER S ENERGY BILLS. The information provided in the Energy Efficiency Upgrade Proposal is for informational purposes only and Customer's actual energy savings may vary based on numerous determining factors including but not limited to weather, changes to Customer utility rates, Facility use and Facility operating hours. (e) Neither the Company nor its affiliates shall be liable to Customer for consequential or incidental damages arising out of the Program, whether in contract, tort (including negligence) or any other theory of recovery. 4. Access to Property (a) The Customer grants PSE&G and its subcontractor(s) reasonable access to the Facility during normal business hours to perform the installation work at such date and time as the Parties shall mutually agree. If Customer s Facility requires work to be performed during off-business hours, arrangements may be made for off hours installation. In all instances, Customer will be responsible for costs arising from failure to grant access as arranged. These costs will not be included with the ECMs installation costs, savings analysis, or Customer contribution. EEE EXT II Ver. 3.0 SLR 6/16/16

134 SCHEDULE MCM-EE PAGE 3 OF 7 (b) In addition, the Customer will allow the Company to make a reasonable number of follow-up visits during the twenty-four months following installation, with advance notice and at a time convenient to the Customer. The purpose of the follow-up visits is to provide the Company with an opportunity to review the operation of the ECMs for program education purposes. During the follow-up visits, the Company may make recommendations to the Customer regarding operation of the ECMs, however Customer is under no obligation to follow any such recommendations. If the Customer implements such recommendations, the Company will not be liable to the Customer in tort (including negligence) for the Customer s reliance on the recommendations. 5. Discretion of Company When undertaking the installation, the Company (at its sole discretion) may choose not to make the installations specified below for reasons, including but not limited to: issues related to safety, discovery of unforeseen conditions or the complete utilization of Company s program budget. 6. Equipment and Customer Contribution (a) The Company or its designee will install the equipment listed in the Energy Efficiency Upgrade Proposal attached to this Agreement. The estimated cost of the installation including the estimated cost of the Customer s contribution, which shall be 30% of the total project cost, is also itemized in this Agreement. The Customer will pay Customer s cost contribution over a period of thirty six (36) months interest free, through an additional charge on the PSE&G utility bill, or, if the Customer chooses, in one lump sum interest free, through an additional charge on the PSE&G utility bill. If a Customer chooses to pay Customer s cost contribution over a period of thirty six (36) months and Customer occupies the Facility under a lease agreement, and if Customer terminates the lease agreement or vacates the Facility prior to making the final Program payment, in addition to all other remedies available to the Company, the Company may declare all of the unpaid balance immediately due and payable, and the Customer shall immediately pay all of the unpaid amount to the Company. The total Project amount is $ The Customer opts to pay its cost contribution via their PSE&G bill in (check one): One lump sum payment of $ OR Thirty six (36) monthly payments of $. (b) The Customer shall pay no more than the estimated cost shown on the report. If the actual cost of the installation is less than the estimated cost or if the Company chooses not to install the ECMs in accordance with Section 5, the Company shall adjust the Customer s contribution and advise the Customer. The reduction in contract amount will be confirmed on the Customer Job Completion Certification Form. (c) If the actual cost of the installation is more than the estimated cost, subject to PSE&G approval, the Customer Contract will be amended and Customer, PSE&G and Landlord (if required) signatures will be required. The increase in contract amount will be confirmed on the Change Order and Amendment. (d) Customer certifies that it has not and will not receive incentives under the New Jersey Clean Energy Program for the same ECMs. EEE EXT II Ver. 3.0 SLR 6/16/16

135 SCHEDULE MCM-EE PAGE 4 OF 7 7. CUSTOMER HAS OBTAINED, TO THE EXTENT IT HAS DEEMED NECESSARY OR PRUDENT, LEGAL COUNSEL TO ADVISE IT ON THIS AGREEMENT. 8. Customer agrees that this Agreement constitutes the full, complete, and only agreement between the Parties and supersedes any previous representations or agreements, and this Agreement shall not be amended except in writing signed by duly authorized representatives of both Parties. 9. The NJ BPU requires that PSE&G participate in the PJM Capacity Market* through the demand reductions achieved by the ECMs installed as part of this Program. The Customer acknowledges and agrees that, for purposes of participating in the PJM Capacity Market, PSE&G shall own the rights to all such demand reductions without cost or obligation to the Customer. PSE&G s ownership of the Project s demand reductions does not affect the Customer s ownership of the ECMs nor the energy savings derived from the ECMs. As required by PJM, PSE&G reserves the right to perform measurement and verification ( M&V ) at all participating facilities. PSE&G M&V activities at the Facility may, in PSE&G s sole discretion, include but not be limited to, meter installation, calibration and maintenance of M&V equipment, data gathering and screening, verification of M&V reports and the use of customer energy and cost savings, and billing information. PSE&G will notify the Customer if an ECM installed at the Facility requires M&V, will inform the Customer of the PSE&G M&V activities, and will work with the Customer to minimize any adverse effects on the Customer s normal operations. PSE&G, or its subcontractor, may audit the Facility to verify the operation of all installed ECMs for up to four (4) years following installation to ensure compliance with PJM Capacity Market rules and regulations. The Customer shall cooperate with and support PSE&G s ownership of the demand reductions as set forth in this Section 9. *PJM Capacity Market PJM Interconnection is the regional transmission operator (RTO) that coordinates the movement of wholesale electricity in all or parts of 13 states including New Jersey. PJM operates a competitive wholesale electricity market and manages the high-voltage electricity grid to ensure reliability for more than 61 million people. PJM holds regular capacity auctions to ensure there is sufficient generating capacity available to meet customer needs. Load reductions from ECMs are allowed to participate in these auctions as negative generation. PSE&G is required to offer the demand reductions achieved through PSE&G s energy efficiency programs into the PJM Capacity Auctions. The Customer will own the ECMs installed as part of the Project, as well as recognize the ECM energy and/or cost savings, however they may not offer the demand reductions into the PJM Capacity Market. 10. Customer agrees (A) That the laws of the State of New Jersey shall govern this Agreement and any dispute arising hereunder shall be litigated in a Federal or State Court located in the State of New Jersey, (B) TO WAIVE TO THE FULLEST EXTENT PERMITTED BY LAW THE RIGHT TO A TRIAL BY JURY. 11. In the event any provision of this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, the remaining provisions of this Agreement shall remain in full force and effect to the maximum extent possible. 12. This Agreement is neither intended to create, nor shall it be construed as creating, a joint venture, partnership or other form of business association between the Parties, or an agreement to enter into any business relationship. EEE EXT II Ver. 3.0 SLR 6/16/16

136 SCHEDULE MCM-EE PAGE 5 OF Entire Agreement; Counterparts This Agreement constitutes the full, complete and only agreement between the Parties hereto with respect to the foregoing and supersedes any previous agreements, representations or undertakings, either oral or written. This Agreement may be executed by the Parties hereto on separate counterparts each of which when executed and delivered shall be deemed to be an original and all of which taken together shall constitute one and the same instrument. 14. Amendments This Agreement shall not be amended, modified or otherwise altered, except pursuant to a written agreement signed by the Parties. 15. Governing Law; Venue This Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of New Jersey. 16. Limitation of Liability; Limitation of Actions In no event will PSE&G or its subcontractors be liable for any losses, damages, cost or expenses however caused, arising from this Agreement. PSE&G's total liability to Customer for all actions, claims, or suits of any kind, whether based upon warranty, contract, tort (including negligence and strict liability) or otherwise, for any losses, damages, costs or expenses of any kind whatsoever arising out of, resulting from, or related to the performance or breach of this Agreement shall, under no circumstances, exceed the cost of the Customer s contribution to the cost of the ECMs. PSE&G shall not, under any circumstances, be liable for any special, indirect, incidental, punitive or consequential losses, damages, costs, or expenses whatsoever (including for lost profits, time or revenue) for anything arising out of the performance or nonperformance of this Agreement, whether claims for said losses or damages are premised on warranty, negligence, strict liability, contract or otherwise. Any action against PSE&G arising out of, resulting from, or related to the performance or breach of this Agreement shall be filed no later than one (1) year after the cause of action has occurred. The provisions of this paragraph 16 shall survive termination or expiration of this Agreement. 17. Indemnity CUSTOMER SHALL DEFEND AND HOLD THE COMPANY HARMLESS FOR ALL NEGLIGENT OR INTENTIONAL ACTS OF THIRD PARTIES. THE PROVISIONS OF THIS PARAGRAPH PROVIDING FOR THE CUSTOMER'S DUTY TO DEFEND, INDEMNIFY, AND HOLD HARMLESS THE COMPANY SHALL ALSO APPLY TO AND PROTECT THE COMPANY'S OFFICERS, AGENTS, SERVANTS, EMPLOYEES, SHAREHOLDERS, SUCCESSORS, AND ASSIGNS. THE CUSTOMER'S OBLIGATION TO DEFEND, INDEMNIFY, AND HOLD HARMLESS THE COMPANY SHALL UNDER THE PROVISIONS OF THIS PARAGRAPH EXCLUDE ONLY AND TO THE EXTENT THAT SUCH INSTANCES ARE DUE TO THE COMPANY'S INTENTIONAL AND DELIBERATE MISCONDUCT OR WHERE THE EEE EXT II Ver. 3.0 SLR 6/16/16

137 SCHEDULE MCM-EE PAGE 6 OF 7 PERSONAL INJURY, DEATH, OCCUPATIONAL DISEASE OR LOSS OR DAMAGE TO REAL OR PERSONAL PROPERTY WAS DUE TO THE COMPANY'S SOLE NEGLIGENCE. 18. Customer Confidentiality PSE&G shall consider all information furnished by Customer to be confidential and shall not disclose any such information to any other person, or use such information itself for any purpose other than in connection with the Program without the Customer s prior written consent. The Customer shall consider all information furnished by PSE&G to be confidential and shall not disclose any such information to any other person, or use such information itself for any purpose other than in connection with the Program without PSE&G s prior written consent; provided, however, either Party may disclose such information as may be required to be disclosed by law or court order from a court of competent jurisdiction, and provided further that, unless otherwise prohibited by law, the Party whose information is required to be disclosed is given reasonable time to take legal action to quash such action and seek other protection. The Customer expressly understands and agrees that PSE&G is required to: 1) Report all program data including customer specific information to the NJ regulators on a periodic basis ( Regulatory Reporting ), and 2) Prepare a Program evaluation report (the Program Evaluation Report ) and submit it to the NJ regulators. The Customer expressly further understands and agrees that both the Regulatory Reporting and the Program Evaluation Report may, among other participant and Project information, identify the Program participants by name and Project address, identify the ECMs implemented by each Program participant and the energy and cost savings achieved by each Program participant. 19. Sale or Transfer of Property If Customer chooses to pay Customer s cost contribution over a period of thirty six (36) months and Customer occupies the Facility under a lease agreement, and if Customer terminates the lease agreement or vacates the Facility prior to making the final Program payment, then in addition to all other remedies available to the Company, the Company may declare all of the unpaid balance immediately due and payable, and the Customer shall immediately pay all of the unpaid amount to the Company. The Customer must provide PSE&G with ninety (90) days advance written notice of a change of ownership, change of billing account information, or if a customer of record modification is made to the billing account. Notice to be sent to: PSE&G Attention: Hardley Dupont 80 Park Plaza M/C T8 Newark, NJ If the Facility or any portion thereof, including property or any improvements thereupon, or any of Customer s ownership interest in the Facility, direct or otherwise, is sold or transferred during the course of the Project, including during the repayment period, without PSE&G s prior written consent, the full amount of the outstanding balance of the Customer s cost contribution due to PSE&G shall become immediately EEE EXT II Ver. 3.0 SLR 6/16/16

138 SCHEDULE MCM-EE PAGE 7 OF 7 due and payable. Alternatively, with PSE&G s prior written consent, PSE&G may allow the Customer to transfer the outstanding balance of the Customer s cost contribution to a different billing account. In the event of (i) a sale or transfer of all or part of the Facility and/or Customer s ownership interest therein, (ii) a lease termination or Customer vacates the Facility, (iii) bankruptcy, insolvency or liquidation of Customer or (iv) forced shut down of Customer s operations and/or the Facility, PSE&G s rights to capture and monitor energy savings shall survive. Authorized Signature of Customer: By signing below, the Customer agrees that the address as it appears above is the address where ECMs will be installed and to the applicability of the Terms and Conditions as set forth in this Agreement. Customer Signature PSE&G Signature Customer Name (Print) PSE&G Name (Print) Customer Title PSE&G Title Customer Date PSE&G Date ONCE EXECUTED BY THE COMPANY AND CUSTOMER AND LANDLORD IF REQUIRED, THIS BECOMES A BINDING CONTRACT Authorized Signature of Landlord (if required): Landlord Signature required Yes No I hereby authorize the installation of the ECMs as described in the Energy Efficiency Upgrade Proposal. Tenant (Customer) Name: Street Address: City: State: N.J. Zip Code: Landlord Signature: Date: Company Name: (if appropriate) Landlord Name: Landlord Telephone: Landlord Address: City: State: Zip: EEE EXT II Ver. 3.0 SLR 6/16/16

139 SCHEDULE MCM-EE PSE&G Residential Multifamily Housing Program PROGRAM OVERVIEW PSE&G s Residential Multifamily Housing Program encourages the installation of energy efficiency improvements by providing cost-effective energy saving opportunities for eligible multifamily housing projects. The program provides building owners with up-front financing for the cost of eligible energy efficiency installations. PSE&G will also provide incentives to help pay for the cost of the energy efficiency measures. Program eligibility includes residential multifamily buildings where natural gas and/or electricity is provided by PSE&G. The buildings can be master metered or individually metered, and include both low-rise and high-rise facilities. How the Program Works Multifamily property owners receive a professional energy audit of their building(s) and a detailed report showing which cost-effective energy conservation measures (ECMs), having simple payback of less than 15 years, may be considered for retrofit or replacement opportunities under the program. Overall project cost effectiveness will determine the package of ECMs approved by PSE&G. Energy savings measures and technologies that maybe considered include lighting, HVAC systems, ventilation improvements, and appliances such as refrigerators, water saving devices and controls. PSE&G s program incentive will buy down the cost of the eligible ECMs by 6 years to not less than 3 years; the customer s share of the project cost will be repaid at 0% interest on the customer s PSE&G utility bill over a period of 10 years for New Jersey Housing and Mortgage Finance Agency (NJHMFA) funded (mortgaged) projects, and over a 5 year period for Non-NJHMFA projects. The customer may also repay their share of the project cost in one lump sum payment if they choose. The typical customer repayment share, after the buy down incentive, averages 35%- 50% of the total project cost; (however the amount varies subject to the individual project). Key Program Elements All ECMs, both those in building common areas and individual living units/tenant spaces are considered under the program and offered as a package. In addition to energy efficiency, most projects provide the additional benefits of comfort and safety along with resident satisfaction. All project costs are covered upfront by PSE&G including project design, measure installation, contractor bidding, administration and construction; thus eliminating the need for the customer to make an upfront capital expenditure. The customer will contract with their own installation contractor to install the approved ECMs. PSE&G will provide the customer with 30% of the agreed upon implementation costs at the start of the approved project. Additional progress payments up to 80% of the total project cost, will be made by PSE&G as the project progresses. The remaining 20% of the project costs will be paid to the customer at the conclusion of the project; after commissioning and final inspection. For more information or to apply contact Rachael Fredericks or Rachael.Fredericks@pseg.com

140 SCHEDULE MCM-EE Introducing PSE&G s NEW Direct Install Program for Government, Non-Profit and UEZ Small Business Customers Public Service Electric and Gas Company (PSE&G) is offering a revamped Direct Install Program for Government, Non-Profit, and UEZ Small Business Facilities. This comprehensive energy efficiency effort helps eligible PSE&G customers save both energy and money while also reducing carbon emissions in the state. Who is Eligible? Applicants must be PSE&G electric and/or gas customers with annual peak demands of 200 kilowatts or less. Eligible facilities include all buildings controlled by municipal, local, regional, and state government offices and all non-profit facilities that meet the requirements of Section 501(c)(3) or Section 501(c)(19) of the Internal Revenue Code. Small businesses must be located within Urban Enterprise Zones (UEZs) in PSE&G service territory. How It Works The program provides eligible customers with a free on-site energy audit and a proposal that lists the costs to install energy efficiency improvements recommended in the audit. These improvements typically include new lighting and heating and air conditioning upgrades. PSE&G will pay 100 percent of the cost to install the recommended energy efficiency measures with the participating customer (or landlord) repaying 30 percent either in a lump sum or interest free on their PSE&G bill over 36 months. Why is PSE&G Offering this Program? Energy efficiency is a major way to lower energy consumption, help customers hold the line on energy costs and reduce carbon emissions in New Jersey. PSE&G has a long-standing commitment to providing programs like Direct Install that help remove the financial and technical barriers that often discourage our customers from investing in and realizing the benefits of increased energy efficiency. For More Information For program information and inquiries, customers may contact the PSE&G Direct Install Program by phone at a toll-free number, or by at DirectInstall@pseg.com.

141 Questions you may have about the PSE&G Direct Install Program for Government, Non-Profit and Small Business Facilities Q. Who is eligible to participate? A. Applicants must receive natural gas and/or electricity from PSE&G and have peak demands of 200 kw or less to be considered for this program. Applicants must also have an acceptable PSE&G bill payment record. Eligible facilities include municipal, local and state government offices, courtrooms, town halls, police and fire stations, sanitation department buildings, transportation department structures, regional authorities, community centers and all non-profit facilities that meet the requirements of Section 501(c)(3) or Section 501(c)(19) of the Internal Revenue Code. County or regionally structured bodies, such as regional utility authorities (waste/sewer) also are included. Small businesses located in an Urban Enterprise Zone (UEZ) are also eligible to participate. The following 25 municipalities within PSE&G s service territory contain UEZs: Bayonne, Camden, Carteret, East Orange, Elizabeth, Gloucester City, Guttenberg, Hillside, Irvington, Jersey City, Kearny, Mount Holly, New Brunswick, Newark, North Bergen, Orange, Passaic, Paterson, Pemberton, Perth Amboy, Plainfield, Roselle, Trenton, Union City, and West New York. If your small business is located in one of these municipalities, you need to determine if it is located in a UEZ. Please visit the New Jersey Department of Community Affairs (DCA) website at nj.gov/njbusiness/financing/uez. Click on the link named 32 designated zones to access an interactive map and enter your small business street address. Q. Who will perform my FREE energy audit and the resulting energy efficiency work? A. Your energy audit and energy efficiency upgrades will be performed by skilled, experienced contractors selected by PSE&G specifically for this program. You (and your landlord if you rent/ lease your facility s space) will be asked to sign a form authorizing PSE&G to perform the audit and energy efficiency upgrades. SCHEDULE MCM-EE To schedule your FREE energy audit, or if you have additional questions, contact your PSE&G Program Representative today: PSE&G For more information about the PSE&G Direct Install Program for Government, Non-Profit and Small Business Facilities, or PSE&G s efforts to help the environment, visit: pseg.com/directinstall We make things work for you. C Printed on recycled paper. SB-DG3 1K 10/ PSE&G. All Rights Reserved. CODI1015-PSEG A subsidiary company of Public Service Enterprise Group Incorporated. Affordable, energy-saving solutions to help lower your energy costs! PSE&G Direct Install Program for Government, Non-Profit and Small Business Facilities We make things work for you.

142 Want to control your energy usage and start saving money? Take the first step today by contacting PSE&G for a FREE energy audit! The PSE&G Direct Install Program for Government, Non-Profit and Small Business Facilities may be able to help you cut your energy costs by up to 30% by offering: A FREE, on-site energy audit of your facility s electric and gas equipment. A written proposal, with recommended energy efficiency measures, based on your audit. Energy-saving equipment installation at your convenience. Incentives will be limited to one project per facility per year. Eligible energy efficiency equipment upgrades may include: Lighting retrofits, including sensors and controls Motors HVAC Site-specific custom projects PSE&G makes the investment in energy efficiency upgrades easy for you by initially covering 100% of the cost to install the recommended measures. SCHEDULE MCM-EE You will repay ONLY 30% of the total cost to install the energy efficiency measures interest free over three years on your PSE&G energy bill OR in one lump sum payment within 30 days of the work being completed. Spend less on energy and more where it counts for your government, non-profit or small business facility! Eligible small businesses must be located in an Urban Enterprise Zone (UEZ). Schedule your FREE, on-site energy audit today. Energy-saving improvements to consider: Replace older fluorescent tubes with newer generation lighting to save up to 40% in electricity costs. To conserve energy and reduce internal heat gain, turn off computers, monitors, printers and copiers during non-business hours. When old motors fail, replace them with premium efficiency motors that operate at a lower annual cost. Ensure you specify the properly sized motor for the application. Install an ENERGY STAR occupancy controlled thermostat to automate your HVAC system. An occupancy controlled thermostat can optimize HVAC operation 24/7 based on your needs, and it could cut your HVAC costs by about 30%. Compare Your Office Space with the National Averages The following graphic represents typical electricity use for an office building. Other 20% Lighting 25% Cooking 2% Refrigeration 4% Water Heating 6% Get started now! Contact your PSE&G Program Representative at the number on the back of this brochure. Office Equipment 11% Source: Department of Energy, Energy Information Administration, Building Energy Data Book, 2006 HVAC 32%