March 1, A copy of the Petition is being served upon the New Jersey Division of Rate Counsel and the Division of Law.

Transcription

1 41 New Jersey 6..4 Natural Gas March 1, 2018 VIA FEDERAL EXPRESS Honorable Aida Camacho, Secretary New Jersey Board of Public Utilities 44 South Clinton A venue, 3rd Floor Suite 314 P.O. Box 350 Trenton, NJ Re: IN THE MATTER OF THE NEW JERSEY HOARD OF PUBLIC UTILITIES' CONSIDERATION OF THE TAX CUTS AND JOBS ACT 01' 2017 BPU DOCKET NO. AX IN THE MATTER OF THE PETITION OF NEW JERSEY NATURAL GAS COMPANY FOR THE ADJUSTMENT OF BASE RATES AND REFUNDS ASSOCIATED WITH THE TAX CUTS AND JOBS ACT OF 2017 BPU DOCKET NO. GR1803 Dear Secretary Camacho: Enclosed herewith for filing, please find an original and ten (1 0) copies ofthe Petition of New Jersey Natural Gas Company ("NJNG") for the adjustment ofbase rates and refunds associated with the Tax Cuts and Jobs Act of2017. A copy of the Petition is being served upon the New Jersey Division of Rate Counsel and the Division of Law. Kindly acknowledge receipt of this filing by date stamping the enclosed copy ofthis letter and returning same in the self-addressed, stamped envelope. Respectfully submitted, AKD:fk Enclosures C: Service List Andrew K. Dembia Regulatory Affairs Counsel 1415 Wyckoff Road P.O. Box 1464 Phone:

2 IN THE MATTER OF THE NEW JERSEY BOARD OF PUBLIC UTILITIES CONSIDERATION OF THE TAX CUTS AND JOBS ACT OF 2017 BPU DOCKET NO. AX IN THE MATTER OF THE PETITION OF NEW JERSEY NATURAL GAS COMPANY FOR THE ADJUSTMENT OF BASE RATES AND REFUNDS ASSOCIATED WITH THE TAX CUTS AND JOBS ACT OF 2017 DOCKET NO. GR1803 SERVICE LIST NJNG Mark Kahrer New Jersey Natural Gas Company 1415 Wyckoff Road P.O. Box 1464 Andrew Dembia, Esq. New Jersey Natural Gas Company 1415 Wyckoff Road P.O. Box 1464 James Corcoran New Jersey Natural Gas Company 1415 Wyckoff Road P.O. Box 1464 Tina Trebino New Jersey Natural Gas Company 1415 Wyckoff Road P.O. Box 1464 NJ BOARD OF PUBLIC UTILITIES Thomas Walker N.J. Board of Public Utilities Division of Energy 44 South Clinton Avenue 3 rd Floor, Suite 314 P.O. Box 350 Trenton, NJ Stacy Peterson N.J. Board of Public Utilities Division of Energy 44 South Clinton Avenue 3 rd Floor, Suite 314 P.O. Box 350 Trenton, NJ Scott Sumliner N.J. Board of Public Utilities Division of Energy 44 South Clinton Avenue 3 rd Floor, Suite 314 P.O. Box 350 Trenton, NJ Megan Lupo, BPU NJ Board of Public Utilities 44 South Clinton Avenue 3 rd Floor, Suite 314 P.O. Box 350 Trenton, NJ DIVISION OF RATE COUNSEL Stefanie A. Brand, Esq., Director Division of Rate Counsel 140 East Front Street 4 th Floor P.O. Box 003 Trenton, NJ Felicia Thomas-Friel, Esq. Division of Rate Counsel 140 East Front Street 4 th Floor P.O. Box 003 Trenton, NJ 08625

3 IN THE MATTER OF THE NEW JERSEY BOARD OF PUBLIC UTILITIES CONSIDERATION OF THE TAX CUTS AND JOBS ACT OF 2017 BPU DOCKET NO. AX IN THE MATTER OF THE PETITION OF NEW JERSEY NATURAL GAS COMPANY FOR THE ADJUSTMENT OF BASE RATES AND REFUNDS ASSOCIATED WITH THE TAX CUTS AND JOBS ACT OF 2017 DOCKET NO. GR1803 SERVICE LIST Sarah Steindel, Esq. Division of Rate Counsel 140 East Front Street 4 th Floor P.O. Box 003 Trenton, NJ Maura Caroselli, Esq. Division of Rate Counsel 140 East Front Street 4 th Floor P.O. Box 003 Trenton, NJ Shelly Massey Division of Rate Counsel 140 East Front Street 4 th Floor P.O. Box 003 Trenton, NJ DEPT. OF LAW & PUBLIC SAFETY DIVISON OF LAW Caroline Vachier, DAG Division of Law 124 Halsey Street P.O. Box Newark, NJ Alex Moreau, DAG Division of Law 124 Halsey Street P.O. Box Newark, NJ Renee Greenberg Dept. of Law & Public Safety Division of Law 124 Halsey Street, 5 th Floor P.O. Box Newark, NJ 07102

4 STATE OF NEW JERSEY BOARD OF PUBLIC UTILITIES IN THE MATTER OF THE NEW JERSEY ) BOARD OF PUBLIC UTILITIES' ) CONSIDERATION OF THE TAX ) CUTS AND JOBS ACT OF 2017 ) BPU DOCKET NO. AX IN THE MATTER OF THE PETITION OF NEW JERSEY NATURAL GAS COMPANY FOR THE ADJUSTMENT OF BASE RATES AND REFUNDS ASSOCIATED WITH THE TAX CUTS AND JOBS ACT OF 2017 BPU DOCKET NO. GR1803 TO: THE HONORABLE COMMISSIONERS OF THE NEW JERSEY BOARD OF PUBLIC UTILITIES 1. New Jersey Natural Gas Company ( Petitioner, NJNG or the Company ) hereby requests that the New Jersey Board of Public Utilities (the Board or BPU ) approve, pursuant to the Board s Order regarding the Tax Cuts and Jobs Act of 2017 ( 2017 Tax Cut Act ), BPU Docket No. AX , 1) a reduction in its base rates of $19.70 million to be effective April 1, 2018; 2) a refund to customers for the difference between the April 1, 2018 effective rates and the current rates for the period commencing January 1, 2018 and ending March 31, 2018; and 3) a refund of $20.10 million associated with the change in the unprotected Accumulated Deferred Income Taxes ( Unprotected ADIT ). The one-time refunds will be adjusted to include interest at the Company s short-term debt rate as specified in the Company s last base rate case 1 and New Jersey Sales and Use Tax ( SUT ) and are anticipated to be applied to customer 1 In the Matter of the Petition of New Jersey Natural Gas Company For Approval of an Increase in Gas Base Rates a for Changes in its Tariff for Gas Service, Approval of SAFE Program Extension, and Approval of SAFE Extension and NJ RISE Rate Recovery Mechanisms Pursuant to N.J.S.A. 48:2-21, 48: and for Changes to Depreciation Rates for Gas Property Pursuant to N.J.S.A. 48:2-18, BPU Docket No. GR (dated September 23, 2016)

5 accounts by late May These rate changes and one-time refunds result in an overall decrease of approximately 7.4 percent to the average residential heating customers annual bill. NJNG also respectfully requests a waiver of N.J.A.C. 14:14:1-5.11(a)4, which requires a 30-day notice for a tariff change, so that the proposed rate reductions and refunds can be effective as of April 1, Finally, NJNG also respectfully requests a waiver of the procedural schedule specified in the Board s Order and place this matter on the Board s agenda currently scheduled for April 25, 2018 and issue a provisional Order in this matter to permit NJNG to issue the refunds discussed below in late May. 2. Petitioner is a corporation duly organized under the laws of the State of New Jersey and is a public utility engaged in the sale, distribution and transportation of natural gas subject to the jurisdiction of the Board. Petitioner's principal business office is located at 1415 Wyckoff Road, Wall, New Jersey Communications and correspondence relating to this Petition should be sent to: Mark G. Kahrer, Vice President - Regulatory Affairs Andrew K. Dembia, Esq., Regulatory Affairs Counsel New Jersey Natural Gas Company 1415 Wyckoff Road, P.O. Box 1464 Wall, New Jersey (732) (M. Kahrer) (732) (A. Dembia) MKahrer@njng.com ADembia@njng.com 4. This Petition (Exh. P-1) is accompanied and supported by the following Exhibits and Schedules that are attached hereto and made part of this Petition: Exh. P-2 Exh. P-3 Exh. P-4 Exh. P-5 Revenue Requirement Schedules Proposed Base Rates and Refund Rates Schedules Red-lined and Clean Proposed NJNG Tariff sheets Bill Impacts Excel files with all formulae intact for the applicable Exhibits are being sent to the electronic distribution list

6 BACKGROUND 5. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 was signed into law by President Donald J. Trump with an effective date of January 1, The 2017 Tax Cut Act sets forth changes to the Federal Internal Revenue Tax Code ( Tax Code"). One significant change is the reduction in the maximum corporate tax rate from thirty-five percent (35%) to twenty-one percent (21%) taking effect on January 1, The Board issued an Order dated January 31, 2018 in response to the 2017 Tax Cut Act. See, In the Matter of the New Jersey Board of Public Utilities Consideration of the Tax Cuts and Jobs Act of 2017, BPU Docket No. AX Based upon the Board s review of the 2017 Tax Cut Act, it appears that these changes to the Tax Code will provide savings to New Jersey public utilities and will result in an over collection of tax revenue by the public utilities that will not be paid in federal income taxes. Id. The Board stated To ensure that ratepayers receive the appropriate benefit from the reduction in taxes collected in rates that will no longer be paid, it is necessary for rates to be adjusted so that utility rates reflect the effective federal corporate tax rate. Id. The Board went on to state that: First, the new tax rate will have a direct impact on the grossing up of the revenue requirement established and approved by the Board in setting rates. In addition, the change in the tax rate may have an impact on other rate factors, including the accumulated deferred income tax. Id. 7. To ensure that the ratepayers receive the appropriate reduction in tax expense, the Board directed the utilities to defer with interest the effects of the 2017 Tax Cut Act on the books and records effective January 1, 2018, which is consistent with the effective date of the 2017 Tax Cut Act. The Board Order stated the interest shall be calculated using the company's short term debt - 3 -

7 on the deferral related to the revenue requirement adjustment from the tax rate of 35% to the tax rate of 21%. Interest on the deferral related to the accumulated deferred income tax adjustment and other rate factors shall be at the company's overall allowed weighted average cost of capital. According to the Board, This will preserve the effect and ultimately pass the reduction in the revenue requirement to ratepayers for expenses relating to taxes reflected in rates but no longer owed. The deferral shall be the difference between a tax rate of 35% and 21 % and its impact on both expense and on the flowback of excess accumulated deferred taxes. Id. 8. Pursuant to the Board s Order, each affected public utility was directed to submit to the Board, no later than March 2, 2018, a Petition with a detailed calculation of the impact resulting from the 2017 Tax Cut Act on the revenue requirement by comparing the latest Board approved test year data and supporting data attached to settlements under the old and new tax laws, and on the revenue requirements collected through annual/periodic clauses comparing the annual data under the old and new tax laws. The affected utilities were further directed to base the calculation upon the criteria set forth in the Board s Order at pages 2 through The Board also gave flexibility to the utilities to submit filings that proposed alternative means of flowing the benefits back to their customers. Specifically the Board stated, The parties are free to examine the amounts of the deferrals and rate adjustment mechanism and the appropriateness of applying the allowed overall weighted average cost of capital on the portion of the deferral related to the accumulated deferred income taxes and short term debt on the portion related to the revenue requirement not being adjusted as of January 1, Id

8 APPLICATION OF TAX CHANGES TO NJNG I. BASE RATE REDUCTION: The revised rates proposed herein and attached hereto as Exhibit P-3, Schedule 1 reflect the impact of the federal income tax rate change on NJNG s total gas distribution revenue. This impact is calculated as the difference between the income tax expense included in the gas distribution revenue requirements authorized by the Board in the Company s prior rate case and 2017 SAFE II and NJ RISE rate proceeding, 2 and the calculated income tax expense had the lower federal income tax rate been in effect. As shown in the revenue requirement summary in Exhibit P-2, Schedule 1, the Company has revised its Pro-Forma Operating Income, Operating Income Deficiency, Revenue Factor and Revenue Requirements for the rate case settlement and its October 2017 SAFE II/NJ RISE filings. These revisions equate to a total revenue requirement reduction of $19.70 million, $18.96 million and $0.75 million for the rate case and SAFE II/NJ RISE, respectively. Exhibit P-2, Schedule 2 is the Company s Weighted Average Cost of Capital as stipulated in the NJNG s last base rate case. The Company s Exhibit P-2, Schedule 3 reflects the 2017 Tax Cut Act s impact on the Revenue Factor. NJNG s Revenue Factor of is being lowered to as a result of the 2017 Tax Cut Act. The Revenue Factor grosses up Revenue Requirements to cover federal and state taxes and other fees. Exhibit P-2, Schedule 4 illustrates the Accumulated Deferred Income Taxes from the Company s last base rate case and the associated balances as of December 31, 2017 with the 2 In the Matter of the Petition of New Jersey Natural Gas Company for Approval of Base Rate Adjustments Pursuant to its NJ RISE and SAFE II Programs, BPU Docket No. GR (dated September 22, 2017) - 5 -

9 effects of the 2017 Tax Cut Act. As NJNG operates on an October 1, September 30, 2018 fiscal year, the $ million excess shown on Exhibit P-2, Schedule 4 is the Company s current estimate. NJNG is requesting that any change in this amount be addressed in the Company s next base rate case that is required to be filed no later than November NJNG has reclassified the $ million of its rate base related deferred income taxes as a regulatory liability. The reclassification has no effect on rate base for purposes of this filing and any changes will be reflected in future rate cases. This regulatory liability is subject to the Internal Revenue Service ( IRS ) normalization rules 3 and will be amortized and returned to ratepayers over years. Exhibit P-2, Schedule 6 illustrates the rate base related deferred income taxes and the associated gross-up. The amortization for this equates to $3.59 million per year. The reduction of the tax rate from thirty-five (35) percent to twenty-one (21) percent changes NJNG s Pro-Forma Operating Income and associated adjustments previously set in the Company s most recent base rate case. Specifically, NJNG s Pro-Forma Operating Income increases from $68.31 million in its prior rate case to $76.17 million. Exhibit P-2, Schedule 5 illustrates the original base rate case Operating Income and the Operating Income with the effects of the 2017 Tax Cut Act. This Schedule also includes the amortization of $3.59 million per year for the regulatory liability associated with the rate base related accumulated deferred income taxes. These adjustments to the base rate case settlement and the subsequent October 2017 SAFE II/NJ RISE settlement results in a prospective decrease in the Company s revenue requirement of $19.70 million. 3 IRC Sec 168(i)(9) - 6 -

10 Exhibit P-3, Schedule 1 distributes the $19.70 million revenue requirement reduction to the Company s rate classifications and includes the associated decreased rates in accordance with the rate design approved in its prior base rate case and October 2017 SAFE II/ NJ RISE rate proceeding. Exhibit P-3, Schedule 2 includes these rates, as well as the refund rates addressed below, with and without sales tax. NJNG proposes the rates to be effective April 1, As shown on Exhibit P-5, a typical residential heating customer will receive an annual decrease of $31.30 or 3 percent. II. REFUND OF JANUARY 1, 2018 THROUGH MARCH 31, 2018 OVER- COLLECTION: Since the tax rate change is effective January 1, 2018 and NJNG s rates reflecting the tax change are proposed to be effective April 1, 2018, NJNG s customers are currently being billed higher rates for January 1, 2018 through March 31, NJNG proposes to refund the difference between the current rates and the April 1, 2018 proposed effective rates including sales tax, and apply the refunds to customer accounts by late May While the actual amount of this refund will be calculated based on actual billing determinants for January through March 2018, Exhibit P-3, Schedule 3 includes an estimated refund of approximately $9.7 million which results in an estimated one-time refund for a typical residential heating customer of $14.84 or 1.4 percent. III. REFUND OF UNPROTECTED EXCESS DEFERRED INCOME TAX: Certain excess deferred income taxes are referred to as unprotected and are not covered under IRS normalization rules. Exhibit P-2, Schedule 7 reflects the December 31, 2017 balance, 2017 Tax Cut Act adjustment, and revised balance of the unprotected excess deferred income - 7 -

11 taxes. In addition, the schedule calculates the gross-up associated with these items, the income tax effect at 28.11%, and the associated revenue requirement of $20.10 million. NJNG proposes to apply refunds to customer accounts for the Unprotected ADIT of $21.4 million inclusive of SUT, by late May The estimated one-time refund for a typical residential heating customer is $31.99 or 3 percent. When combined with the rate refund in Section II, the total estimated refund for a typical residential heating customer is $46.83 or 4.4 percent. Actual refund amounts will be determined based on the active customers and their billed usage for January 1, 2018 through March 31, IV. INTEREST ON REFUNDS Exhibit P-3, Schedule 3 includes a calculation of estimated interest for the refunds referenced in Parts II and III above. The interest will be included in the refunds to customer accounts by late May V. RIDERS NJNG is modifying its riders for any associated changes resulting from the 2017 Tax Cut Act and any changes are reflected in the rider deferred balances. Any changes will be incorporated in NJNG s upcoming annual filings addressing the riders, where necessary. NOTICE AND SERVICE OF FILING: NJNG has served notice and a copy of this filing, together with a copy of the annexed exhibits and supporting schedules being filed herewith, upon the New Jersey Division of Rate Counsel, 140 East Front Street, 4th Floor, P.O. Box 003, Trenton, New Jersey, and the Department of Law and Public Safety, 124 Halsey Street, P.O. Box 45029, Newark, New Jersey, - 8 -

12 Copies of this Petition and supporting exhibits and schedules will also be sent to the persons identified on the service list provided with this filing. Moreover, copies of the Company s filing will be available at NJNG s Customer Service Centers and on the Company s website at: WHEREFORE, NJNG respectfully requests that the Board: 1. Approve NJNG s request to decrease its base rates by $19.70 million effective April 1, 2018; 2. Approve as of April 1, 2018, or as of the effective date of the Board Order in this proceeding, NJNG s request to apply refunds to customer accounts for the difference between the current rates and the rates approved in this proceeding for the period January 1, 2018 through March 31, 2018 by late May 2018; 3. Approve as of April 1, 2018, or as of the effective date of the Board Order in this proceeding, NJNG s request to apply refunds to customer accounts of $21.4 million for unprotected excess ADIT by late May Approve NJNG s request to true-up its excess deferred income tax balances in the Company s next base rate case which is required to be filed no later than November Grant a waiver of N.J.A.C. 14:14:1-5.11(a)4, which requires a 30-day notice for a tariff change, so that the proposed rate reductions and refunds can be effective as of April 1, 2018; and - 9 -

13 6. Grant a waiver of the procedural schedule specified in the Board's Order and place this matter on the Board's agenda currently scheduled for April 25, 2018 and issue a provisional Order in this matter to permit NJNG to issue the refunds in late May. 7. Grant such other relief, as the Board deems just, reasonable and necessary. Respectfully submitted, Date: March 1, 2018 Andrew K. Dembia, Esq

14 STATE OF NEW JERSEY ) COUNTY OF MONMOUTH ) VERIFICATION MARK G. KAHRER of full age, being duly sworn according to law, on his oath deposes and says: 1. I am Vice President, Regulatory Affairs for New Jersey Natural Gas Company, the Petitioner in the foregoing Petition. 2. I have read the annexed Petition, along with the Schedules and Exhibits attached thereto, and the matters and things contained therein are true to the best of my knowledge and belie Mark G. Kahrer Sworn and subscribed to before me this) 2M day offebruary 2018 (/~dtuw!pn L1sa_ H~m ; lfoyj- LISA HAMILTON Commission # Notarv Public - State of New Jersey My Commission Ex[lires January 04,

15 EXHIBIT P-2 SCHEDULE-1 NEW JERSEY NATURAL GAS COMPANY DETERMINATION OF REVENUE REQUIREMENTS ($000) EXISTING BASE RATES TAX REFORM SETTLEMENT SAFE II/NJ RISE TOTAL SETTLEMENT SAFE II/NJ RISE TOTAL Rate Base $ 1,374,000 $ 36,036 $ 1,410,036 $ 1,374,000 $ 36,036 $ 1,410,036 Rate of Return 6.90% 6.90% 6.90% 6.90% 6.90% 6.90% Operating Income Requirement $ 94,806 $ 2,488 $ 97,294 $ 94,806 $ 2,488 $ 97,294 Pro-Forma Operating Income $ 68,306 $ 87 * $ 68,393 $ 76,166 $ 106 * $ 76,272 Operating Income Deficiency $ 26,500 $ 2,401 $ 28,901 $ 18,640 $ 2,382 $ 21,022 Revenue Factor Revenue Requirements $ 45,000 $ 4,076 $ 49,076 $ 26,044 $ 3,328 $ 29,372 Revenue Requirements Decrease $ 18,956 $ 749 $ 19,704 * - O&M and Depreciation Expense Credits

16 EXHIBIT P-2 SCHEDULE-2 NEW JERSEY NATURAL GAS COMPANY WEIGHTED AVERAGE COST OF CAPITAL ($ MILLIONS) SETTLEMENT Embedded Weighted Percent Cost Cost Long-Term Debt 45.07% 3.89% 1.76% Short-Term Debt 2.43% 1.00% 0.02% Common Equity 52.50% 9.75% 5.12% Total % 6.90% TAX REFORM Embedded Weighted Percent Cost Cost Long-Term Debt 45.07% 3.89% 1.76% Short-Term Debt 2.43% 1.00% 0.02% Common Equity 52.50% 9.75% 5.12% Total % 6.90%

17 EXHIBIT P-2 SCHEDULE-3 NEW JERSEY NATURAL GAS COMPANY REVENUE FACTOR SETTLEMENT TAX REFORM Revenue Increase Uncollectible Rate BPU Assessment Rate Rate Counsel Assessment Rate Income before State of NJ Bus. Income Tax State of NJ Bus. Income 9.00% Income Before Federal Income Taxes Federal Income 35% Return Revenue Factor

18 EXHIBIT P-2 SCHEDULE-4 NEW JERSEY NATURAL GAS COMPANY ACCUMULATED DEFERRED INCOME TAXES ($000) SETTLEMENT TAX REFORM 35% 21% Estimated Balance at Balance at Balance at Excess June 30, 2016 December 31, 2017 December 31, 2017 ADIT Depreciation Cost of Removal Repairs and Maintenance Section R&D Capitalized Interest $ (289,267) $ (354,236) $ (192,561) (161,675) 63,116 71,421 40,178 31,243 (68,037) (64,390) (35,071) (29,319) 2,867 2,842 1,551 1,291 1,647 1, Contribution-in-Aid-of-Construction 1,270 1, NJ Corporate Business Tax Depreciation Study (46,077) (42,001) (50,235) 8, Total Accumulated Deferred Income Taxes $ (334,346) $ (383,269) $ (234,385) $ (148,884)

19 EXHIBIT P-2 SCHEDULE-5 NEW JERSEY NATURAL GAS COMPANY PRO-FORMA DISTRIBUTION OPERATING INCOME ($000) SETTLEMENT TAX REFORM Test Year Test Year June 30, 2016 June 30, 2016 Test Year Distribution Operating Income $ 92,166 $ 101,443 Total Pro-Forma Adjustments - Rate Case $ (23,860) $ (28,866) Total Pro-Forma Distribution Operating Income - Rate Case $ 68,306 $ 72,577 Excess DFIT Amortization - 3,589 Total Pro-Forma Distribution Operating Income - Tax Reform $ 68,306 $ 76, % 28.11% Pro Forma Adjustments, pre-tax (39,023) (39,023) Effective Tax Rate 40.85% 28.11% (15,941) (10,969) Adjustments, net of tax (23,082) (28,054) Capital Additions (Capital) (753) (784) Cyber Security (Capital) (25) (28) Total Pro Forma Adjustments (23,860) (28,866)

20 EXHIBIT P-2 SCHEDULE-6 NEW JERSEY NATURAL GAS COMPANY Excess DFIT ($000) SETTLEMENT TAX REFORM Test Year Test Year June 30, 2016 June 30, 2016 Protected Plant Excess DFIT $ 148,884 Gross-Up 59,137 Total Protected Plant Excess DFIT $ - $ 208,020 Amortization Period: Protected Plant Excess DFIT ,992 Net Income/Expense Income 28.11% Operating Income Increase (Decrease) After Taxes $ - $ 4,992-1,403 $ - $ 3,589

21 EXHIBIT P-2 SCHEDULE-7 NEW JERSEY NATURAL GAS COMPANY Unprotected Excess Deferred Income Taxes $0 Beginning Balance Tax Cut Act Adjustment Revised Balance Coal Gas/Gas Costs (15,660) 4,910 (10,750) Prepayments 432 (258) 173 Pension/OPEBs (25,447) 7,979 (17,468) Superstorm Sandy (5,306) 1,664 (3,642) Conservation Programs (48,349) 1,516 (46,833) Bad Debt 1,855 (582) 1,273 Miscellaneous 2,889 (906) 1,983 (89,587) 14,323 (75,264) Gross Up 5,689 20,012 Income 28.11% 5,625 14,387 Revenue Factor Revenue Requirement 20,101

22 Exhibit P-3 Schedule 1 Page 1 of 3 New Jersey Natural Gas Company Base Rates and Revenues at Present and Proposed Rates Present Rates Proposed Rates Component Amount Units Rate Revenue Rate Revenue Decrease (a) (b) (c) (d) (e) (f) (g) (h) RS RS Residential Service Customer Charge 6,004,134 Bills $ 8.32 $ 49,954,393 $ 8.08 $ 48,513,400 Volumetric Charge 475,830,705 Therms ,433, ,823,978 Total Base Revenues $ 232,387,885 $ 218,337, % GSS GSS General Service Small (less than 5,000 Annual Therms) Customer Charge 357,258 Bills $ $ 9,006,465 $ $ 8,749,240 Volumetric Charge 37,214,019 Therms ,318, ,224,805 Volumetric Charge - A/C 82,978 Therms , ,875 Total Base Revenues $ 22,331,619 $ 20,979, % GSL GSL General Service Large (5,000 + Annual Therms) Customer Charge 103,184 Bills $ $ 5,422,323 $ $ 4,832,110 Demand Charge 10,991,370 Therms ,024, ,921,644 Volumetric Charge 140,220,210 Therms ,925, ,770,176 Volumetric Charge - A/C 265,200 Therms , ,776 Total Base Revenues $ 63,392,412 $ 59,542, %

23 Exhibit P-3 Schedule 1 Page 2 of 3 New Jersey Natural Gas Company Base Rates and Revenues at Present and Proposed Rates Present Rates Proposed Rates Component Amount Units Rate Revenue Rate Revenue Decrease (a) (b) (c) (d) (e) (f) (g) (h) FT FT Firm Transportation Service* Customer Charge 1,283 Bills $ $ 313,326 $ $ 200,500 Demand Charge 2,257,162 Therms ,280, ,994,047 Volumetric Charge 26,785,013 Therms ,003, ,003,519 Total Base Revenues $ 6,597,326 $ 6,198, % DGC DGC Distributed Generation - Commercial* Customer Charge 158 Bills $ $ 8,181 $ $ 7,897 Demand Charge 331,313 Therms , ,993 Volumetric Charge - Winter 2,007,970 Therms , ,281 Volumetric Charge - Summer 1,950,841 Therms , ,135 Total Base Revenues $ 660,248 $ 620, % NGV / CNG NGV / CNG Natural Gas Vehicle / Compressed Natural Gas Service Customer Charge 60 Bills $ $ 3,100 $ $ 2,980 Volumetric Charge 1,222,089 Therms , ,978 Total Base Revenues $ 213,910 $ 200, % TOTAL SYSTEM BASE DISTRIBUTION REVENUES $ 325,583,400 $ 305,879, % DECREASE -19,704,065 TARGET DECREASE -19,704,000 Difference ($65) * In BPU Docket No. GR , the settlement rate design increased fixed charges for Firm Transportation and Distributed Generation - Commercial customers and decreased their volumetric charges. The rates above reflect the maintenance of the rate case volumetric charge and decrease to the fixed charges.

24 Exhibit P 3 Schedule 1 Page 3 of 3 New Jersey Natural Gas Company Base Rates at Present and Proposed Rates for DGR and EGS Rates NJNG does not currently have customers served under these service classifications. The DGR Customer Charge is equivalent to the RS Customer Charge. All other charges are decreased by the overall percentage revenue decrease. Component Present Rates Proposed Rates Decrease DGR DGR Distributed Generation Residential Customer Charge (0.24) Volumetric Charge - Winter (0.0109) -6.1% Volumetric Charge - Summer (0.0076) -6.0% EGS EGS Electric Generation Service Customer Charge (56.56) -6.1% Demand Charge (0.0976) -6.1% Volumetric Charge (0.0003) -6.0%

25 New Jersey Natural Gas Company Estimated Refund Rates Exhibit P 3 Schedule 2 Page 1 of 2 The Deferred Tax and Interest refund rates are estimated based on the customer and sales forecast. Actual refund rates will be determined based on the active customers and their billed usage for January 1, 2018 through March 31, Deferred Tax Refund Rate Unprotected Deferred Tax Refund 1/1/18-3/31/18 therms ($20,101,377) 331,278,223 Pre-tax Deferred Tax Refund Rate (0.0607) After-tax Deferred Tax Refund Rate (0.0647) Interest Refund Rates Pre-tax Interest Refund Rate After-tax Interest Refund Rate 1/1/18-3/31/18 Interest therms RS ($43,715) 239,403,742 (0.0002) (0.0002) GSS ($3,791) 19,897,694 (0.0002) (0.0002) GSL ($11,275) 63,420,206 (0.0002) (0.0002) FT ($1,135) 7,256,889 (0.0002) (0.0002) DGC ($153) 1,008,758 (0.0002) (0.0002) NGV/CNG ($44) 290,934 (0.0002) (0.0002) Total ($60,112) 331,278,223

26 New Jersey Natural Gas Company Estimated Refund Rates Exhibit P 3 Schedule 2 Page 2 of 2 The Deferred Tax and Interest refund rates are estimated based on the customer and sales forecast. Actual refund rates will be determined based on the active customers and their billed usage for January 1, 2018 through March 31, Current Rates 4/1/18 Rates Refund Rate Pre-tax After-tax Pre-tax After-tax Pre-tax After-tax RS Customer Charge (0.24) (0.25) Base Rate (0.0265) (0.0283) Deferred Tax Refund (0.0607) (0.0647) Interest (0.0002) (0.0002) Total Variable Rate Refund (0.0874) (0.0932) Average RS Heat Customer Estimated Rate Refund including interest therms (14.84) Aerage RS Heat customer estimated Deferred Tax Refund (31.99) Total Estimated Refund (46.83) GSS Customer Charge (0.72) (0.77) Base Rate (0.0294) (0.0313) Deferred Tax Refund (0.0607) (0.0647) Interest (0.0002) (0.0002) Total Variable Rate Refund (0.0903) (0.0962) GSL Customer Charge (5.72) (6.10) Demand Charge (0.0094) (0.01) Base Rate (0.0225) (0.0240) Deferred Tax Refund (0.0607) (0.0647) Interest (0.0002) (0.0002) Total Variable Rate Refund (0.0834) (0.0889) FT Customer Charge (87.92) (93.75) Demand Charge (0.1269) (0.13) Base Rate Deferred Tax Refund (0.0607) (0.0647) Interest (0.0002) (0.0002) Total Variable Rate Refund (0.0609) (0.0649) DG Customer Charge (1.80) (1.92) Demand Charge (0.1197) (0.13) Base Rate Deferred Tax Refund (0.0607) (0.0647) Interest (0.0002) (0.0002) Total Variable Rate Refund (0.0609) (0.0649) CNG/NGV Customer Charge (2.00) (2.13) Base Rate (0.0105) (0.0112) Deferred Tax Refund (0.0607) (0.0647) Interest (0.0002) (0.0002) Total Variable Rate Refund (0.0714) (0.0761)

27 Exhibit P 3 Schedule 3 Page 1 of 4 New Jersey Natural Gas Company Estimated Refund and Interest Calculation The following refund amounts and the Deferred tax refund rates are estimated based on the customer and sales forecast. Actual deferred tax refund rates and actual refund amounts will be determined based on the active customers and their billed usage for January 1, 2018 through March 31, Customer refunds will be determined on an individual customer basis and credited to each customer's bill. Jan-18 Feb-18 Mar-18 Apr-18 Total Residential Service Billing Determinants Customer Charge 496, , ,211 1,490,443 Volumetric Charge 95,271,900 80,198,666 63,933, ,403,742 Refund Rates Customer Charge $ (0.25) $ (0.25) $ (0.25) Volumetric Charge $ (0.0283) $ (0.0283) $ (0.0283) Deferred Tax Refund $ (0.0647) $ (0.0647) $ (0.0647) Refund Customer Charge $ (124,105) $ (124,203) $ (124,303) $ (372,611) Volumetric Charge $ (2,696,195) $ (2,269,622) $ (1,809,309) $ (6,775,126) Total Rate Refund $ (2,820,300) $ (2,393,825) $ (1,933,612) $ (7,147,737) Deferred Tax Refund $ (6,164,092) $ (5,188,854) $ (4,136,477) $ (15,489,422) Refund and Interest Beginning Balance - (18,309,722) (20,703,547) (22,637,159) Rate Refund (2,820,300) (2,393,825) (1,933,612) Deferred Tax Refund (15,489,422) Ending Balance (18,309,722) (20,703,547) (22,637,159) (22,637,159) Average Balance (9,154,861) (19,506,634) (21,670,353) (22,637,159) Average Balance Net of Tax (6,581,429) (14,023,319) (15,578,817) (16,273,853) Interest Rate/ % 0.083% 0.083% 0.083% Interest (5,485) (11,686) (12,982) (13,562) Cumulative Interest (5,485) (17,171) (30,153) (43,715) Cumulative Interest Including SUT (5,848) (18,308) (32,151) (46,611) Ending Balance including interest and SUT (18,315,570) (20,721,855) (22,669,310) (22,683,770) General Service Small (less than 5,000 Annual Therms) Billing Determinants Customer Charge 30,005 30,044 30,091 90,141 Volumetric Charge 8,053,838 6,706,068 5,137,789 19,897,694 Volumetric Charge - A/C Refund Rates Customer Charge $ (0.77) $ (0.77) $ (0.77) Volumetric Charge $ (0.0313) $ (0.0313) $ (0.0313) Volumetric Charge - A/C $ (0.0050) $ (0.0050) $ (0.0050) Deferred Tax Refund $ (0.0647) $ (0.0647) $ (0.0647) Refund Customer Charge $ (23,104) $ (23,134) $ (23,170) $ (69,408) Volumetric Charge $ (252,085) $ (209,900) $ (160,813) $ (622,798) Volumetric Charge - A/C $ - $ - $ - $ - Total Rate Refund $ (275,189) $ (233,034) $ (183,983) $ (692,206) Deferred Tax Refund $ (521,083) $ (433,883) $ (332,415) $ (1,287,381) Refund and Interest Beginning Balance - (1,562,570) (1,795,604) (1,979,587) Rate Refund (275,189) (233,034) (183,983) Deferred tax Refund (1,287,381) Ending Balance (1,562,570) (1,795,604) (1,979,587) (1,979,587) Average Balance (781,285) (1,679,087) (1,887,595) (1,979,587) Average Balance Net of Tax (561,666) (1,207,096) (1,356,992) (1,423,125) Interest Rate/ % 0.083% 0.083% 0.083% Interest (468) (1,006) (1,131) (1,186) Cumulative Interest (468) (1,474) (2,605) (3,791) Cumulative Interest Including SUT (499) (1,572) (2,777) (4,042) Ending Balance including interest and SUT (1,563,069) (1,797,176) (1,982,364) (1,983,629)

28 Exhibit P 3 Schedule 3 Page 2 of 4 New Jersey Natural Gas Company Estimated Refund and Interest Calculation The following refund amounts and the Deferred tax refund rates are estimated based on the customer and sales forecast. Actual deferred tax refund rates and actual refund amounts will be determined based on the active customers and their billed usage for January 1, 2018 through March 31, Customer refunds will be determined on an individual customer basis and credited to each customer's bill. Jan-18 Feb-18 Mar-18 Apr-18 Total General Service Large (5,000 + Annual Therms) Billing Determinants Customer Charge 8,662 8,666 8,659 25,987 Demand Charge 922, , ,100 2,767,400 Volumetric Charge 25,030,155 21,174,600 17,215,452 63,420,206 Volumetric Charge - A/C Refund Rates Customer Charge $ (6.10) $ (6.10) $ (6.10) Demand Charge $ (0.01) $ (0.01) $ (0.01) Volumetric Charge $ (0.0240) $ (0.0240) $ (0.0240) Volumetric Charge - A/C $ (0.0647) $ (0.0647) $ (0.0647) Deferred Tax Refund $ (0.0647) $ (0.0647) $ (0.0647) Refund Customer Charge $ (52,839) $ (52,863) $ (52,820) $ (158,522) Demand Charge $ (9,225) $ (9,228) $ (9,221) $ (27,674) Volumetric Charge $ (600,724) $ (508,190) $ (413,171) $ (1,522,085) Volumetric Charge - A/C $ - $ - $ - $ - Total Rate Refund $ (662,788) $ (570,281) $ (475,212) $ (1,708,281) Deferred Tax Refund $ (1,619,451) $ (1,369,997) $ (1,113,840) $ (4,103,287) Refund and Interest Beginning Balance - (4,766,075) (5,336,356) (5,811,569) Rate reduction (662,788) (570,281) (475,212) Non-plant deferred tax (4,103,287) Ending Balance (4,766,075) (5,336,356) (5,811,569) (5,811,569) Average Balance (2,383,037) (5,051,216) (5,573,962) (5,811,569) Average Balance Net of Tax (1,713,166) (3,631,319) (4,007,122) (4,177,937) Interest Rate/ % 0.083% 0.083% 0.083% Interest (1,428) (3,026) (3,339) (3,482) Cumulative Interest (1,428) (4,454) (7,793) (11,275) Cumulative Interest Including SUT (1,522) (4,749) (8,309) (12,022) Ending Balance including interest and SUT (4,767,597) (5,341,105) (5,819,878) (5,823,591) Firm Transportation Service Billing Determinants Customer Charge Demand Charge 191, , , ,037 Volumetric Charge 2,627,897 2,074,162 2,554,830 7,256,889 Refund Rates Customer Charge $ (93.75) $ (93.75) $ (93.75) Demand Charge $ (0.13) $ (0.13) $ (0.13) Volumetric Charge $ - $ - $ - Deferred Tax Refund $ (0.0647) $ (0.0647) $ (0.0647) Refund Customer Charge $ (10,026) $ (10,026) $ (10,026) $ (30,077) Demand Charge $ (24,947) $ (21,979) $ (21,979) $ (68,905) Volumetric Charge $ - $ - $ - $ - Total Rate Refund $ (34,973) $ (32,004) $ (32,004) $ (98,982) Deferred Tax Refund $ (170,025) $ (134,198) $ (165,298) $ (469,521) Refund and Interest Beginning Balance - (504,494) (536,498) (568,502) Rate reduction (34,973) (32,004) (32,004) Non-plant deferred tax (469,521) Ending Balance (504,494) (536,498) (568,502) (568,502) Average Balance (252,247) (520,496) (552,500) (568,502) Average Balance Net of Tax (181,340) (374,184) (397,192) (408,696) Interest Rate/ % 0.083% 0.083% 0.083% Interest (151) (312) (331) (341) Cumulative Interest (151) (463) (794) (1,135) Cumulative Interest Including SUT (161) (494) (847) (1,210) Ending Balance including interest and SUT (504,655) (536,992) (569,349) (569,712)

29 Exhibit P 3 Schedule 3 Page 3 of 4 New Jersey Natural Gas Company Estimated Refund and Interest Calculation The following refund amounts and the Deferred tax refund rates are estimated based on the customer and sales forecast. Actual deferred tax refund rates and actual refund amounts will be determined based on the active customers and their billed usage for January 1, 2018 through March 31, Customer refunds will be determined on an individual customer basis and credited to each customer's bill. Jan-18 Feb-18 Mar-18 Apr-18 Total Distributed Generation - Commercial Billing Determinants Customer Charge Demand Charge 27,609 27,609 27,609 82,828 Volumetric Charge - Winter 345, , ,804 1,008,758 Volumetric Charge - Summer Refund Rates Customer Charge $ (1.92) $ (1.92) $ (1.92) Demand Charge $ (0.13) $ (0.13) $ (0.13) Volumetric Charge - Winter $ - $ - $ - Volumetric Charge - Summer $ - $ - $ - Deferred Tax Refund $ (0.0647) $ (0.0647) $ (0.0647) Refund Customer Charge $ (25) $ (25) $ (25) $ (76) Demand Charge $ (3,589) $ (3,589) $ (3,589) $ (10,768) Volumetric Charge - Winter $ - $ - $ - $ - Volumetric Charge - Summer $ - $ - $ - $ - Total Rate Refund $ (3,614) $ (3,614) $ (3,614) $ (10,843) Deferred Tax Refund $ (22,324) $ (21,152) $ (21,791) $ (65,267) Refund and Interest Beginning Balance - (68,881) (72,496) (76,110) Rate reduction (3,614) (3,614) (3,614) Non-plant deferred tax (65,267) Ending Balance (68,881) (72,496) (76,110) (76,110) Average Balance (34,441) (70,688) (74,303) (76,110) Average Balance Net of Tax (24,759) (50,818) (53,416) (54,715) Interest Rate/ % 0.083% 0.083% 0.083% Interest (21) (42) (45) (46) Cumulative Interest (21) (63) (107) (153) Cumulative Interest Including SUT (22) (67) (115) (163) Ending Balance including interest and SUT (68,903) (72,563) (76,225) (76,273) Natural Gas Vehicle / Compressed Natural Gas Service Billing Determinants Customer Charge Volumetric Charge 97,723 92, , ,934 Refund Rates Customer Charge $ (2.13) $ (2.13) $ (2.13) Volumetric Charge $ (0.0112) $ (0.0112) $ (0.0112) Deferred Tax Refund $ (0.0647) $ (0.0647) $ (0.0647) Refund Customer Charge $ (11) $ (11) $ (11) $ (32) Volumetric Charge $ (1,094) $ (1,031) $ (1,133) $ (3,258) Total $ (1,105) $ (1,042) $ (1,144) $ (3,290) Deferred Tax Refund $ (6,323) $ (5,956) $ (6,545) $ (18,823) Refund and Interest Beginning Balance - (19,929) (20,970) (22,114) Rate reduction (1,105) (1,042) (1,144) Non-plant deferred tax (18,823) Ending Balance (19,929) (20,970) (22,114) (22,114) Average Balance (9,964) (20,449) (21,542) (22,114) Average Balance Net of Tax (7,163) (14,701) (15,487) (15,898) Interest Rate/ % 0.083% 0.083% 0.083% Interest (6) (12) (13) (13) Cumulative Interest (6) (18) (31) (44) Cumulative Interest Including SUT (6) (19) (33) (47) Ending Balance including interest and SUT (19,935) (20,989) (22,147) (22,161)

30 Exhibit P 3 Schedule 3 Page 4 of 4 New Jersey Natural Gas Company Estimated Refund and Interest Calculation The following refund amounts and the Deferred tax refund rates are estimated based on the customer and sales forecast. Actual deferred tax refund rates and actual refund amounts will be determined based on the active customers and their billed usage for January 1, 2018 through March 31, Customer refunds will be determined on an individual customer basis and credited to each customer's bill. Jan-18 Feb-18 Mar-18 Apr-18 Total Rate Reduction Refund Total RS $ (2,820,300) $ (2,393,825) $ (1,933,612) $ (7,147,737) GSS $ (275,189) $ (233,034) $ (183,983) $ (692,206) GSL $ (662,788) $ (570,281) $ (475,212) $ (1,708,281) FT $ (34,972.98) $ (32,004.34) $ (32,004.34) $ (98,982) DGC $ (3,614.44) $ (3,614.44) $ (3,614.44) $ (10,843) NGV/CNG $ (1,105.15) $ (1,041.59) $ (1,143.68) $ (3,290) $ (3,797,969) $ (3,233,801) $ (2,629,570) $ (9,661,339) Non-Plant Deferred Tax Refund Total RS $ (15,489,422) $ (15,489,422) GSS $ (1,287,381) $ (1,287,381) GSL $ (4,103,287) $ (4,103,287) FT $ (469,520.70) $ (469,521) DGC $ (65,266.65) $ (65,267) NGV/CNG $ (18,823.43) $ (18,823) $ (21,433,701) $ (21,433,701) Interest Refund Total RS $ (5,848) $ (12,460) $ (13,843) $ (14,460) $ (46,611) GSS $ (499) $ (1,073) $ (1,205) $ (1,265) $ (4,042) GSL $ (1,522) $ (3,227) $ (3,560) $ (3,713) $ (12,022) FT $ (161) $ (333) $ (353) $ (363) $ (1,210) DGC $ (22) $ (45) $ (48) $ (48) $ (163) NGV/CNG $ (6) $ (13) $ (14) $ (14) $ (47) $ (8,058) $ (17,151) $ (19,023) $ (19,863) $ (64,095) Total Refund Total RS $ (22,683,770) GSS $ (1,983,629) GSL $ (5,823,591) FT $ (569,712) DGC $ (76,273) NGV/CNG $ (22,161) $ (31,159,135)

31 FifthFourth Revised Sheet No. 51 BPU No. 9 - Gas Superseding FourthThird Revised Sheet No. 51 SERVICE CLASSIFICATION - RS RESIDENTIAL SERVICE Redline Tariff Sheets AVAILABILITY This service is available to any residential Customer in the territory served by the Company using gas for any domestic purpose. This rate is applicable to individually-metered apartments and to rooming and boarding houses where the number of rental bedrooms is not more than twice the number of bedrooms used by the Customer. Gas delivered under this schedule may not be used for other than domestic purposes except when such use is incidental to domestic use. CHARACTER OF SERVICE Firm gas service where Customer may either purchase gas supply from the Company s Rider A for Basic Gas Supply Service ( BGSS ) or from a Marketer or Broker. MONTHLY RATES Customer Charge: Customer Charge per meter per month $ Delivery Charge: Residential Heating Delivery Charge per therm $ Residential Non-Heating Delivery Charge per therm $ BGSS Charge: BGSS Charge per therm for Sales Customers See Rate Summaries at the end of this Tariff These rates are inclusive of all applicable taxes and riders and are subject to adjustment for all other applicable riders, taxes, assessments or similar charges lawfully imposed by the Company. See Rate Summaries at the end of this Tariff for a summary of components incorporated in these rates. Date of Issue: March 2December 5, Effective for service rendered on Issued by: Mark G. Kahrer, Vice President and after AprilJanuary 1, 2018 Filed pursuant to Order of the Board of Public Utilities entered in Docket No. AX ER

32 FifthFourth Revised Sheet No. 53 BPU No. 9 - Gas Superseding FourthThird Revised Sheet No. 53 SERVICE CLASSIFICATION DGR DISTRIBUTED GENERATION SERVICE - RESIDENTIAL Redline Tariff Sheets AVAILABILITY This service is available to any residential customer using distributed generation technologies including, but not limited to, microturbines and fuel cells to generate electricity for domestic purposes. CHARACTER OF SERVICE Firm gas service where Customer may either purchase gas supply from the Company s Rider A for Basic Gas Supply Service ( BGSS ) or from a Marketer or Broker. MONTHLY RATES Customer Charge: Customer Charge per meter per month $ Delivery Charge: November - April $ May - October $ BGSS Charge: BGSS Charge per therm for Sales Customers See Rate Summaries at the end of this Tariff These rates are inclusive of all applicable taxes and riders and are subject to adjustment for all other applicable riders, taxes, assessments or similar charges lawfully imposed by the Company. See Rate Summaries at the end of this Tariff for a summary of components incorporated in these rates. MINIMUM MONTHLY CHARGE The minimum monthly charge shall be the Customer Charge. Where service is taken for less than one month, the minimum charge will be prorated. BALANCING CHARGE ADJUSTMENTS The Balancing Charge is included in the Delivery Charge and is subject to adjustment in the Company's annual BGSS proceeding. All revenues derived from this Charge will be credited to the BGSS. See Rider A for the current Balancing Charge. Date of Issue: March 2December 5, Effective for service rendered on Issued by: Mark G. Kahrer, Vice President and after AprilJanuary 1, 2018 Filed pursuant to Order of the Board of Public Utilities entered in Docket No. AX ER

33 FifthFourth Revised Sheet No. 55 BPU No. 9 - Gas Superseding FourthThird Revised Sheet No. 55 SERVICE CLASSIFICATION GSS GENERAL SERVICE - SMALL Redline Tariff Sheets AVAILABILITY This service is available to any Customer in the entire territory served by the Company who uses less than 5,000 therms annually and uses gas for all purposes other than residential service and interruptible service. Where the Customer uses the Cooling, Air Conditioning and Pool Heating service ( CAC ) under Special Provision I.2, the Company may, upon application by the Customer, meter the space heating and CAC use separately. Street Lighting Service also will be supplied under this schedule (Special Provision II.1). CHARACTER OF SERVICE Firm gas service where Customer may either purchase gas supply from the Company s Rider A for Basic Gas Supply Service ( BGSS ) or from a Marketer or Broker. MONTHLY RATES Customer Charge: Customer Charge per meter per month $ Delivery Charge: Delivery Charge per therm $ BGSS Charge: BGSS Charge per therm for Sales Customers See Rate Summaries at the end of this Tariff These rates are inclusive of all applicable taxes and riders and are subject to adjustment for all other applicable riders, taxes, assessments or similar charges lawfully imposed by the Company. See Rate Summaries at the end of this Tariff for a summary of components incorporated in these rates. MINIMUM MONTHLY CHARGE The minimum monthly charge shall be the Customer Charge. Where service is taken for less than one month, the minimum charge will be prorated. BALANCING CHARGE ADJUSTMENTS The Balancing Charge is included in the Delivery Charge and is subject to adjustment in the Company's annual BGSS proceeding. All revenues derived from this Charge will be credited to the BGSS. See Rider A for the current Balancing Charge. Date of Issue: December 5March 2, Effective for service rendered on Issued by: Mark G. Kahrer, Vice President and after AprilJanuary 1, 2018 Filed pursuant to Order of the Board of Public Utilities entered in Docket No. AX ER

34 SixthFifth Revised Sheet No. 56 BPU No. 9 - Gas Superseding FifthFourth Revised Sheet No. 56 SPECIAL PROVISIONS SERVICE CLASSIFICATION - GSS GENERAL SERVICE - SMALL (continued) I. Applicable to All Customers Under This Service Classification Redline Tariff Sheets 1. Annual Review The Company shall review, at least once a year, each GSS Customer s annual usage based on the most recent twelve (12) months of billing information to determine if the General Service Large ( GSL ) Service Classification is applicable to the Customer. If the Customer s normalized annual usage is greater than or equal to 5,500 therms, the customer will be switched to GSL. 2. Air Conditioning and Pool Heating Upon separate application, GSS Customers who have installed and are using gas air conditioning and pool heating equipment will be billed on the above Monthly Rates except that the delivery charge will be per therm for all monthly consumption of gas for services rendered between May 1 and September 30 of each year. The charge will include, $ per therm margin, and appropriate riders, taxes, assessments and surcharges. Commercial Air Conditioning and Pool Heating ( CAC ) customers will be separately metered, except, at the Company s sole discretion, existing Customers may use the same meter for their cooling, air conditioning or pool heating load and their space heating load as long as there is minimal base load during the period air conditioning rates are in effect. Where a CAC Customer uses gas under this service classification in a direct-fired chiller/heater and the heating load is metered through the same meter as the cooling, air conditioning or pool heating load, and further, where the gas used for heating is billed separately, the GSS Customer Charge shall be waived, provided the Customer pays the Customer Charge under its heating service in all twelve (12) months of the year. Date of Issue: December 5March 2, Effective for service rendered on Issued by: Mark G. Kahrer, Vice President and after AprilJanuary 1, 2018 Filed pursuant to Order of the Board of Public Utilities entered in Docket No. AX ER