Supplement No. 156 to Tariff Gas Pa. P.U.C. No. 9 of Columbia Gas of Pennsylvania, Inc.

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1 Mark R. Kempic Director Rates & Regulatory Policy GAumhta. Gas* of Pennsylvania A NiSource Company 121 Champion Way, Suite 1 Canonsburg, PA (724) Cellular: (412) Fax: (724) mkempic@nisource.com September VIA OVERNIGHT MAIL DELIVERY: Rosemary Chiavetta, Secretary Pennsylvania Public Utility Commission Commonwealth Keystone Building 4 North Street Harrisburg, Pennsyivania 1712 IVE SEP 2$ ZOiO PA PUBLIC UTiLITYCOMMiSSION SECRETARY : S BUREAU Re: Supplement No. 156 to Tariff Gas Pa. P.U.C. No. 9 of Columbia Gas of Pennsylvania, Inc. Dear Ms. Chiavetta: Enclosed for filing, please find an original and nine (9) copies of Supplement No. 156 to Columbia Gas of Pennsylvania's ("Columbia's" or "the Company's") Tariff Gas, Pa. P.U.C. No. 9 issued September 29, 21, to become effective November 27, 21. Also enclosed are responses to the filing requirements at 52 Pa. Code Statement of Nature, Reason and Basis Supplement No. 156 proposes a modification to Tariff Rule No Measurement, to provide for a BTU content adjustment to the monthly determination of customers' billing MCFs in addition to existing adjustments for pressure and temperature. This change is necessary to mitigate the impact on customers and the Company of increasing volumes of high BTU content gas that occur disproportionately across the service territory. Unadjusted, disparate BTU content in the gas consumed by customers in one geographic region compared to the gas consumed in another region create an inequity in the total costs billed to different customer groups for the same service. Additionally, the rate of Increase in the system-wide average BTU content causes material revenue erosion over which the Company has no control or influence. If approved, the modifications proposed in Supplement No. 156 wil! permanently and equitably address fluctuations in BTU content in Columbia's gas supply. Copies of this filing have been served on the parties as designated on the certificate of service. If you have any questions regarding the information contained in this filing, please contact me or Ted Gallagher at the address shown above, or to our outside counsel, Michael W. Hassell, Post & Schell P.C, 17 North Second Street, 12 th Floor, Harrisburg, Pennsylvania 1711, ( ).

2 Please return a date-stamped copy of this letter in the enclosed self-addressed, stamped envelope. Sincerely, LC Mark R. Kempic Director, Rates and Regulatory Policy SEP 2D ZGIO PA PUBUC UTILiTY COMiWiSSJOW SECRETARY'S BUREAU Enclosures c: Theodore J. Gallagher, Esquire Michael W. Hassell, Esquire Kimberly S. Cuccia, Esquire Johnnie E. Simms, Esquire - Office of Trial Staff Irwin A. Popowsky, Esquire - Consumer Advocate William R. Lloyd, Jr., Esquire - Small Business Advocate w/ enclosure

3 CERTIFICATE OF SERVICE I hereby certify that true and correct copies ofthe foregoing have been served upon the following persons, in the manner indicated, in accordance with the requirements of 1.54 (relating to service b}' a participant). VIA FIRST CLASS MAIL Johnnie E. Simms Office of Trial Staff 4 North Street, 2 nd Floor West P.O. Box 3265 Harrisburg, PA Irwin A. Popowsky Office of Consumer Advocate 555 Walnut Street, 5 th Floor Harrisburg, PA William R. Lloyd, Jr. Office of Small Business Advocate 3 North Second Street, Suite 112 Harrisburg, PA 1711 RECEIVED SEP 2 9 2Q1 PA PUBLIC UTILITY COMMISSION SECRETARY'S BUREAU Date: September 29, 21 Kiiriberly S\puccia, AttomeyJhD. No Counsel NISOURCE CORPORATE SERVICES COMPANY COLUMBIA GAS OF PENNSYLVANIA, INC. 121 Champion Way, Suite 1 Canonsburg, PA Telephone: kscuccia(s),nisource.com

4 Supplement No. 156 to Tariff Gas - Pa. P.U.C. No. 9 COLUMBIA GAS OF PENNSYLVANIA, INC. RATES AND RULES FR FURNISHING GAS SERVICE IN RECEIVED SEP 2 9 zoio p A PUBLIC UTILITY COMMISSION SECRETARY'S BUREAU THE TERRITORY AS DESCRIBED HEREIN ISSUED: September 29, 21 EFFECTIVE: November 27, 21 ISSUED BY: M. CAROL FOX, PRESIDENT 121 CHAMPION WAY CANONSBURG, PENNSYLVANIA NOTICE This Tariff Supplement Makes Changes to the Existing Tariff See Page No. 2

5 Columbia Gas of Pennsylvania, Inc. Supplement No. 156 to Tariff Gas - Pa. P.U.C. No. 9 One-hundred Thirty-fourth Revised Page No. 2 Canceling One-hundred Thirty-third Revised Page No. 2 LIST OF CHANGES MADE BY THIS TARIFF SUPPLEMENT Page Cover 2 2a-c a Page Description Tariff Cover Page List of Changes Blank Rule Measurement of Gas Rule Measurement Equipment Rule BTU Adjustment Factor Definitions RADS Rule Gas Supply Requirements Revision Description Supp #. Effective & Issue Date. List of Changes. Intentionally Left Blank for Future Use. Adds BTU Content to Measurement of Gas. Removes reference to orifice meters; adds BTU content as adjustment to meter readings. Adds description and calculation of the new BTU Adjustment Factor. Modifies definition of CHOICE Primary FTS Daily Capacity requirement to reflect the introduction of the BTU Adjustment Factor. Modifies the Calculation of Choice Daily Delivery Requirement to reflect the introduction ofthe BTU Adjustment Factor. Issued: September 29, 21 M. Carol Fox President Effective: November 27, 21

6 Columbia Gas of Pennsylvania, Inc. Supplement No. 156 to Tariff Gas - Pa. P.U.C. No. 9 Third Revised Page No. 2a Canceling Second Revised Page No. 2a PAGE 2a INTENTIONALLY LEFT BLANK FOR FUTURE USE Issued: September 29, 21 M. Carol Fox President November 27, 21

7 Columbia Gas of Pennsylvania, Inc. Supplement No. 156 to Tariff Gas - Pa. P.U.C. No. 9 Seventeenth Revised Page No. 2b Canceling Sixteenth Revised Page No. 2b PAGE 2b INTENTIONALLY LEFT BLANK FOR FUTURE USE Issued: September 29, 21 M. Carol Fox President Effective: November 27, 21

8 Columbia Gas of Pennsylvania, Inc. Supplement No. 156 to Tariff Gas - Pa. P.U.C. No. 9 Fourth Revised Page No. 2c Canceling Third Revised Page No. 2c PAGE 2c INTENTIONALLY LEFT BLANK FOR FUTURE USE Issued: September 29, 21 M. Carol Fox President Effective: November 27, 21

9 Columbia Gas of Pennsylvania, Inc. Supplement No. 156 to Tariff Gas - Pa. P.U.C. No. 9 Fifth Revised Page No. 53 Canceling Fourth Revised Page No. 53 RULES AND REGULATIONS GOVERNING THE DISTRIBUTION AND SALE OF GAS (Continued) 15. Measurement 15.1 Measurement of Gas Except as herein otherwise provided, the measurement of gas service shall be by meters purchased and installed by the Company. The meter will be of such size and type as the Company may determine to adequately serve the customer's service requirements, and the Company may from time to time, change or alter the equipment to provide for accurate measurement. To determine measured volumes, factors such as those for pressure, temperature, BTU content, specific gravity and deviation from the laws for ideal gases shall be applied. (C) 15.2 Meters Not Available In cases where meters are not available due to circumstances beyond the control of the company, and the necessity for rendering gas service to the customer is urgent, the Company may, by written agreement with the customer, commence service and render bills temporarily on the basis of estimated gas consumption Meter Reading Bills will be rendered and be payable once each month. The Company may read any meter once each month, but ordinarily it will read meters of domestic and commercial customers once each two months. As to any customer whose meter is read once each two months, the consumption for the first month of each bimonthly meter reading period shall be determined by estimation on the basis of the customer's previous usage, adjusted for weather conditions; and the consumption for the second month of each bimonthly meter reading period shall be determined by subtracting the first month's estimated consumption from the total actual consumption for the bimonthly period as shown by the meter. The bill for each month shall be the result of applying to the consumption, determined as aforesaid, the applicable rates and charges contained in this Tariff. Upon request the Company will supply any customer with a card form upon which he may record his meter reading at the end of the first month of each bimonthly meter reading period; and if such card is received by the Company within two days after the close of such month the bill for such month will be computed from the meter reading shown on the card instead of by estimate. The Company will adjust estimates of bills for changes in conditions of which it has been notified in advance by a customer Automatic Meter Reading All readings by an automatic meter reading device shall be deemed actual readings. (C) Indicates Change Issued: September 29, 21 M. Carol Fox President Effective: November 27, 21

10 Columbia Gas of Pennsylvania, Inc. Supplement No. 156 to Tariff Gas - Pa. P.U.C. No. 9 Third Revised Page No. 54 Canceling Second Revised Page No Estimated Usage RULES AND REGULATIONS GOVERNING THE DISTRIBUTION AND SALE OF GAS (Continued) 15. Measurement - Continued The Company shall estimate usage (1)for one month of each meter reading period where scheduled meter readings are on a bimonthly basis or (2) when a meter is installed but the scheduled mater reading cannot be obtained due to the inability of the Company's agent or representative to gain access to the meter location at the time scheduled, or (3) in case any meter or measuring device for any reason fails to register for any period of time the full consumption by a customer or (4) where the Company is unable to obtain a meter reading for causes beyond its control. Estimated readings shall be based upon prior consumption at the particular location for a similar period of time corrected for current conditions. The customer shall be obligated to pay the bill based on the estimated consumption as though the same was based on an actual meter reading, and failure to so pay shall subject the customer and his service to Rule Termination for Nonpayment. Bills based on estimated readings shall be subject to adjustment for any unusual circumstances found to have affected the quantity of gas used, or for obvious errors in estimates, which adjustments shall be made not later than on the next subsequent bill rendered the customer. In those instances where the Company's agent or representative is unable to gain access to the customer's premises, during the regular scheduled working hours to obtain a meter reading, the number of estimated readings shall be limited to three consecutive months, and customer's service, thereafter, is subject to termination. (See Rule 18.3-Terminalion for Cause) Flowing Temperature The Company shall determine the temperature of the natural gas flowing through the meter or meters by recorder, from established tables for the location involved, or by use of temperature sending elements used in conjunction with electronic measuring devices Measuring Equipment Unless otherwise agreed upon, the Company will own, install, maintain and operate measuring stations equipped with displacement or flow meters and other necessary measuring equipment to determine the volumes of gas delivered. The gas delivered shall be measured in accordance with the latest approved methods in use in the industry generally. Meter readings shall be adjusted for pressure and temperature conditions and BTU content. Customer may install check measuring equipment, provided such equipment is installed so as not to interfere with the operations of the Company. The Company and Customer, in the presence of each other, shall have access to the other's measuring equipment at all reasonable times, but, unless otherwise agreed upon, the reading, calibrating and adjustment thereof and the changing of charts shall be done only by the owner thereof. Both the Company and Customer shall have the right to be present at the time of any installing, reading, cleaning, changing, repairing, inspecting testing, calibrating or adjusting done in connection with the other's measuring equipment. The records from such measuring equipment shall remain the property of their owner, but, upon request, each will submit to the other its records and charts, together with calculations therefrom, for inspection, subject to return within thirty (3) days after receipt thereof. Customer shall exercise reasonable care in the installation, maintenance and operation of its equipment so as to avoid any inaccuracy in the determination ofthe volume of gas delivered. (C) (C) Indicates Change Issued: September 29, 21 M. Carol Fox President Effective: November 27, 21

11 Supplement No. 156 to Tariff Gas - Pa. P.U.C. No. 9 Columbia Gas of Pennsylvania, Inc. Original Page No. 54a RULES AND REGULATIONS GOVERNING THE DISTRIBUTION AND SALE OF GAS (Continued) 15. Measurement - Continued 15.8 BTU Adjustment Factor The Company shall derive the BTU content of the natural gas from equipment at delivery points located within each Pipeline Scheduling Point ("PSP") in the Company's service territory. Each month, the Company shall calculate the six month rolling average BTU content for each PSP based on the six most recent readings for each PSP. The Company shall calculate a BTU Adjustment Factor for each PSP by dividing the six month rolling average BTU content for that PSP by the historical average BTU content as established in the Company's most recent base rate proceeding, presently at The Company shall adjust metered and estimated volumes by the BTU Adjustment Factor. (C) (C) Indicates Change Issued: September 29, 21 M. Carol Fox President Effective: November 27, 21

12 Columbia Gas of Pennsylvania, Inc. Supplement No. 156 to Tariff Gas - Pa. P.U.C. No. 9 Fourth Revised Page No. 182 Cancelling Third Revised Page No "Choice Aggregation Nomination Group" shall mean a Customer or group of Customers electing Rate RDS or SCD organized pursuant to the requirements of the Choice Aggregation Service as specified in the Rules Applicable to Distribution Service section of this tariff. 1.1 "Choice Daily Delivery Requirement" shall mean the normalized daily delivery requirement for a Choice Aggregation Nomination Group, calculated by the Company pursuant to the requirements of Paragraph of these Rules Applicable to Distribution Service "Choice EBB" shall mean the Company's electronic bulletin board ("EBB") which is used to submit Customers in the Choice service, obtaining Choice reports etc "Choice Primary FTS Daily Capacity Requirement" shall mean the Primary FTS capacity required to be held by an NGS for a Choice Aggregation Nomination Group in a quantity equal to the Choice Aggregation Nomination Group's estimated normalized annual usage divided by 365, converted to a Dth basis using the Company's most recent six-month rolling average Btu content for each Pipeline Scheduling Point, and adjusted for Company use and Retainage. (C) 1.13 "Choice Tariff" shall mean either Rate SCD or Rate RDS, Rider CC, these Rules Applicable to Distribution Service, as applicable for the particular Customer being served, as well as the Company's Rules and Regulations, 1.14 "City Gate" shall mean the point where interstate pipelines deliver gas into the Company's facilities "Commission" shall mean the Pennsylvania Public Utility Commission "Customer Proxy" generally means the entity that receives notices (e.g. OFOs, OMOs, SFOs etc), receives bills, and controls the gas bank account. Specifically, "Responsible Party" shall mean the Customer in circumstances described in paragraphs 1, 2 and 3 of the "Shipper" definition, and the Natural Gas Supplier in circumstances described by paragraph 4 of the "Shipper" definition "Columbia Gas Transmission Corporation Market Area" shall have the same meaning as provided in Columbia Gas Transmission Corporations' tariffs "Delivery Point" shall mean the location at which the Company shall first receive the gas supply from an NGS "EBB" shall mean an Electronic Bulletin Board system. 1.2 "Favored Customer" shall mean any customer of an NGDC or its affiliated NGS which receives a benefit of economic value to retain that customer on the distribution system "FERC" shall mean the Federal Energy Regulatory Commission. (C) Indicates Change Issued: September 29, 21 M. Carol Fox President Effective: November 27, 21

13 Columbia Gas of Pennsylvania, Inc. Supplement No. 156 to Tariff Gas - Pa. P.U.C. No. 9 Second Revised Page No. 238 Cancelling First Revised Page No In recognition that the capacity provided by an NGS pursuant to the Other Primary FTS option may be needed by the Company to serve Customers in the event that the NGS discontinues providing Natural Gas Supply Services on the Company's system, and subject to the Company's obligations concerning its Acquisition Process for New and Renewed Capacity under the Joint Petition for Settlement of Restructuring Filing in Docket No. R , any Other Primary FTS capacity must be assignable to the Company or another NGS and available for the Company's use or assignment to another NGS. The capacity must also have terms and conditions that permit the contract term to be extended under the interstate pipeline's tariff and under FERC rules and regulations. At the request of the party assigning new, replacement and/or alternate capacity to the Company hereunder, the Company shall use its best efforts to obtain operationally and economically equivalent capacity to that assigned to it. Upon the Company's obtaining such equivalent capacity and the Commission's approval, the Company shall reassign the capacity back to the requesting party. Any capacity so returned or assigned to the Company and/or any replacement capacity provided by the Company shall qualify for assignment and/or full cost recovery by the Company under the Act. Licensed NGSs taking assignment or providing new or replacement capacity will be able to use supplies delivered through this capacity to satisfy the needs of all their Customers, subject to the operational requirements and limitations ofthe Company's system. 4.9 GAS SUPPLY REQUIREMENTS Delivery Obligations. Every day the NGS shall deliver the Choice Daily Delivery Requirement for each of the NGS's Choice Aggregation Nomination Groups, unless directed otherwise by the Company through an Operational Flow Order Firm Contracts. The NGS agrees that it shall enter into firm supply contracts for the months of November through March for a daily gas supply quantity equal to the sum of the Choice Daily Delivery Requirement of all of its Choice Aggregation Nomination Groups plus any applicable pipeline fuel retention requirements Calculation of Choice Daily Delivery Requirement. The Company shall calculate the Choice Daily Delivery Requirement for each Choice Aggregation Nomination Group between the 15 th and the 2,h of each month and provide the NGS with its Choice Daily Delivery Requirements for each Choice Aggregation Nomination Group. The Choice Daily Delivery Requirement shall be calculated by the Company as follows: the Company shall add the estimated normalized annual consumptions of all Customers presently in the NGS's Choice Aggregation Nomination Group to arrive at an aggregate sum for the Choice Aggregation Nomination Group; the Company shall divide that aggregate sum by 365; the Company shall convert that quotient to a Dth basis using the Company's most recent six-month rolling average BTU Content for each Pipeline Scheduling Point, and adjust it for Company use and Retainage. The resultant quantity shall be the Choice Daily Delivery Requirement for that Choice Aggregation Nomination Group. (C) (C) Indicates Change Issued: September 29, 21 M. Carol Fox President Effective: November 27, 21

14 Columbia Gas of Pennsylvania, Inc. ' L- v-* CZ s V LI LJ Supplement No. 156 to Tariff Gas Pa. P.U.C. No. 9 Supporting Documentation ^ ^ # 21 PA PUBLIC UTILITY COMMISSION SBCHETAHY'S BUREAU Applicability; public utilities other than canal, turnpike, tunnel, bridge and wharf companies. (a) Whenever a public utility, other than a canal, turnpike, tunnel, bridge or wharf company files a tariff, revision or other supplement effecting changes in the terms and conditions of service rendered or to be rendered, it shall submit to the Commission, with the tariff, revision or supplement, statements showing all ofthe following: (1) The specific reasons for each change. Response; Columbia Gas of Pennsylvania Inc.'s ("CPA" or "the Company") Tariff Rule No Measurement currently provides that in determining measured volumes, "factors such as those for pressure, temperature, specific gravity and deviation from the laws for ideal gases shall be applied." Volatility in these external physical conditions of pressure, temperature, specific gravity, etc. impacts the volumetric consumption determined at the meter. Applying factors to account for that volatility mitigates the impact. BTU content is yet another condition, albeit internal to the commodity as opposed to external, which impacts the amount of gas that will be used by the customer. That is, two customers, using natural gas in the identical fashion but with different BTU content, will have different measured gas volumes. Columbia, like the vast majority of other Natural Gas Distribution Companies in the Commonwealth, purchases gas supplies and pipeline capacity on a dekatherm basis (as required by FERC Tariffs) that reflects the BTU value of gas; however, it has always sold gas to customers on a volumetric basis (i.e. cubic feet) that ignores the BTU value of the gas. While unadjusted volumetric billing has not posed a problem in the past because BTU values have generally been consistent across the state, the recent and continued volatility in BTU values have made unadjusted volumetric billing inequitable. Supplement No. 156 proposes to add BTU content as an additional factor to be incorporated into the calculation of the monthly billing determinant to put gas sales on the same unit of measure as gas purchases and to eliminate the inequity that has been introduced to customer billing as a result of the volatile BTU content. This modification will address: 1) the inequity in the collection of costs among customers due to increasing BTU content in specific geographic locations in CPA's service territory; and 2) the erosion ofthe Company's sales volume and distribution revenue stream caused by an increasing BTU content in the gas supply. The Company is also proposing to eliminate references to orifice meters from Tariff Rule No Measuring Equipment, as those meters are no longer utilized on the Company's distribution system.

15 Background The driving factors in gas consumption are weather, economic conditions and conservation activities. These factors are routinely incorporated into the analysis of the variance between forecasted and actual consumption. Columbia has recently experienced erosion in the consumption of natural gas on its system that cannot be attributed to these factors alone. The examination of gas supply statistics for the past 1 years revealed that after years of a stable average system-wide BTU content of 1.4, the average BTU value of the gas supply rose from 1.4 in 2 to approximately 1.8 in 21. At 6/3/1, the system 6-month rolling average BTU content was Further investigation of consumption data showed that the decreases in consumption did not occur evenly across the service territory, but rather in specific geographic areas associated with four of the eight Pipeline Scheduling Points (PSPs) located within the Company's service territory. The BTU data by PSP show that there were historical, but relatively stable and minor, variances among the PSPs until 26. See Attachment A - Historical Six-month Rolling-average BTU Content by PSP and Attachment B - Graphical Representation of PSP BTU Volatility. Analysis ofthe BTU content variation among Columbia's eight PSPs demonstrates that volumetric erosion correlated to the increase in the BTU content of gas supplies delivered to Columbia. (Note: PSP 4 represents a supply delivery point into the distribution system, but does not directly serve customers. Therefore, for calculation and application of a BTU content adjustment, supply at PSP 4 will be combined with neighboring PSP 26.) CPA has recently experienced a remarkable increase in the BTU content in gas supply delivered to four of its eight PSPs with an increase of over 2.5% in three and over 8% in the fourth. The increase in BTU content corresponds to the increased flow of Marcellus Shale gas into the supply being delivered to these PSPs. BTU content in the remaining four PSPs, all in southern Pennsylvania crossing from west to east, has either remained stable or fallen slightly. Marcellus Shale gas does not flow into the southern PSPs. Left unaddressed, these variations give rise to inequities to customers and the Company that were discussed above. Implementation of the modification to the determination of monthly billing MCFs that is proposed herein will alleviate the impact of varying BTU content, whether the trend of increase continues at its current pace, stops or reverses. It should be noted, however, that based upon communication with the Company's upstream gas commodity suppliers, it is CPA's expectation that the increases will continue in the western part of the state but are not anticipated to impact the southern and eastern portions ofthe service territory. The disparity is expected to continue into the future without a certain end date. The introduction ofthe Marcellus Shale gas into the Pennsylvania supply has presented a number of novel issues for the Commission, LDCs and Natural Gas Suppliers to address. Indeed the PUC has initiated a proceeding at Docket No. I to consider jurisdictional issues. Current regulations at 52 Pa. Code 59.3 {d)(1) specifies a minimum BTU content, but does not address volatility in BTU content or upper limits on the BTU content in gas supply. Clearly, the nature of the Marcellus Shale gas is not a phenomenon previously encountered or contemplated. The Company is therefore proposing a novel solution to the inequities that result from the increasing proportion of Marcellus Shale gas in its total commodity supply.

16 Basis for Proposed Modification The BTU content of gas supply is directly, but inversely, related to the gas volume consumed for a specific purpose, i.e., the greater the BTU content the less MCFs required to heat a home, power an engine and so forth. According to the data presented in Attachment A, customers in the western geographic areas (PSPs 35, 36, 38 and 39) of Columbia's service territory use gas with a higher BTU content than those in the eastern portion of Columbia's service territory, resulting in differences in the amount of MCFs needed to achieve the same result or purpose (a heated home, a line of production, etc.). Columbia, like most other Pennsylvania gas distribution companies, has historically purchased gas volumes and pipeline capacity in Dth (as required by FERC) but sells to customers on a purely volumetric (i.e. ccf) basis. Columbia's rate design incorporates the allocation and recovery of costs over MCFs of consumption. Consequently, significant variances in the BTU content of gas supply cause the bills of a group of customers in one geographic area to be higher or lower than the bills for the same service provided to customers in a different geographic region, even though all of those customers are taking service under the same PUCapproved CPA tariffed rate. In combination with BTUs that vary significantly among geographic regions, that rate design creates a disparity among customers as to the portion of allocated costs that each customer pays, increasing variances in the BTU content in some but not all regions of the service territory exacerbates the inequity. Customers' bills can and do vary for a myriad of reasons, most of which are driven by the customers' particular consumption choices, equipment preferences or operating processes. In this instance however, customers are getting a financial advantage or disadvantage from factors totally beyond their control or influence. This circumstance is at odds with the principal underlying the current design of Columbia's rates, which allocates costs across customers' consumption. The Company is proposing the application of a BTU factor to metered MCFs to calculate an adjusted billing determinant. Each month the Company will calculate seven different BTU adjustment factors, one for each PSP. The factor for each PSP will be the ratio of the most recently available six-month rolling average BTU for each ofthe seven PSPs to 1.535, which is the BTU factor underlying the demand forecast in the Company's most recent base rate case. The factor for each PSP will be applied to customer bills in that PSP to ensure that the billing properly reflects the BTU value of the gas for that particular PSP. The Company is also modifying the delivery requirement of CHOICE NGS's suppliers consistent with the foregoing modification. Currently, under Rules Applicable to Distribution Service Section 4.9.3, CHOICE suppliers are directed to deliver gas for their CHOICE aggregation group based upon the Company's annual system average BTU content. CHOICE aggregation groups are PSP specific. Therefore, as proposed, the CHOICE supplier will deliver gas calculated on the basis of the most recent six-month rolling average BTU Content for each PSP-specific BTU content of each aggregation group. This will appropriately match supplier deliveries to the BTU content of gas delivered to their customers. (2) The total number of customers served by the utility.

17 Response: customers as of 6/3/1. (3) A calculation of the number of customers, by tariff subdivision, whose bills will be affected by the change. Response: As of 6/3/1: Rate Schedule RSS 28,864 Residential Distribution Service (CAP) 24,562 Rate Schedule RDGSS 25 Rate Schedule SGSS 29,78 Rate Schedule NSS 2 Rate Schedule LGSS 76 Rate Schedule RDS Rate Schedule PRDGDS 7 Rate Schedule SCD 6,278 Rate Schedule SGDS 1,626 Rate Schedule SDS 46 Rate Schedule LDS 99 Rate Schedule MLDS Class I 6 Rate Schedule MLDS Class II 4 Total 411,272 (4) The effect of the change on the utility's customers. Response: The only impact is that Customers' bills will be affected as discussed in response to (b)(3)-(6) (5) The direct or indirect effect of the proposed change on the utility's revenues and expenses. Response: The proposed changes will eliminate decreases or increases in revenue caused solely by variations in the BTU content ofthe Company's gas supply. Customers located in PSPs where the rolling six-month average BTU content exceeds the ratio of DTH/MCF will be billed greater adjusted usage, resulting in increased revenues, while customers located in PSPs where the rolling six-month average BTU content is less than the ratio of DTH/MCF will be billed lower adjusted usage, resulting in decreased revenues. As explained below, based upon the six-month rolling average of each of the PSPs as of June 3, 21, the net increase and decreases would

18 produce a net increase in revenues of approximately $3.7 million over the revenues received for the twelve months ended June 3, 21. This represents an increase of approximately.8% in operating revenues over operating revenues of $447,71,13 for the twelve months ended June 3, 21. Other than initial costs for implementing the necessary changes to the Company's billing and accounting systems to accommodate the change, the Company's expenses will not be affected. (6) The effect of the change on the service rendered by the utility. Response: The proposed changes will not impact the character or level of service that the Company provides to its customers. (7) A list of factors considered by the utility in its determination to make the change. The list shall include a comprehensive statement about why these factors were chosen and the relative importance of each. This subsection does not apply to a portion of a tariff change seeking a general rate increase as defined in 66 Pa.C.S. 138 (relating to voluntary changes in rates). Response: Fairness to customers and natural gas suppliers are the primary factors driving the Company's request to adjust meter readings relative to the BTU content of the gas consumed by the customer. The provisions and rates of the Company's tariff are designed to equitably collect costs of service to customers and to provide the Company with a reasonable opportunity to earn its approved rate of return. The proposed tariff modification will protect Columbia's customers and the Company from the impact of physical circumstances that are beyond the Company's sphere of influence or control. Given the expected continuing, and likely growing, disparity in BTU content resulting from increased deliveries of Marcellus gas into western Pennsylvania markets, the change will more fairly and accurately assign costs to customers through rates that are set on an MCF basis. (8) Studies undertaken by the utility in order to draft its proposed change. This paragraph does not apply to a portion of a tariff change seeking a general rate increase as defined in 66 Pa.C.S Response: Analysis of BTU content variance among PSPs and actual to forecasted sales variances provided the basis for the modifications proposed herein. (9) Customer polls taken and other documents which indicate customer acceptance and desire for the proposed change. If the poll or other documents reveal discernable public opposition, an explanation of why the change is in the public interest shall be provided.

19 Response: Columbia has not solicited customer input relative to the proposed tariff modification. (1) Plans the utility has for introducing or implementing the changes with respect to its ratepayers. Response: The Company plans to incorporate this factor into the existing meter multiplier for temperature and pressure. Attachment C is a sample bill showing the current meter adjustments. After final approval, Columbia will provide customers with information regarding the adjustment factor for BTU content and how it will be applied to their monthly metered gas consumption. Customers have had a decade of experience with the temperature compensation adjustment currently employed by Columbia and the Company believes a consistent approach will be most receptive to customers. Additionally, many customers are familiar with meter multipliers on their bills for electric service. The Company will also communicate with NGSs operating within its service territory regarding the application and impact of the BTU adjustment factor on measured consumption. (11) FCC, FERC or Commission orders or rulings applicable to the filing. Response: The Company is unaware of any orders or rulings that apply to the proposed tariff modifications. (b) Whenever a public utility, other than a canal, turnpike, tunnel, bridge or wharf company files a tariff, revision or supplement which will increase or decrease the bills to its customers, it shall submit in addition to the requirements of subsection (a), to the Commission, with the tariff, revision or supplement, statements showing the following: (1) The specific reasons for each increase or decrease. Response: Please see the response to 53.52(a)(1) for an explanation of the need for the modification, the implementation of which will result in either increases or decreases depending upon the location of a customer's premise. (2) The operating income statement of the utility for a 12-month period, the end of which may not be more than 12 days prior to the filing. Water and wastewater utilities with annual revenues under $1, and municipal corporations subject

20 to Commission jurisdiction may provide operating income statements for a 12- month period, the end of which may not be more than 18 days prior to the filing. Response: The income statement for the 12-months ended June 3, 21 is included as Attachment D. (3) A calculation of the number of customers, by tariff subdivision, whose bills will be increased. Response: Please see Attachment E which includes in Column 1 of Part B, by tariff subdivision, the number of customers whose bills will increase as a result of the proposed tariff modification. Those customers have services located within the PSPs 35, 36, 38 and 39 where BTU content is above the system-wide average. (4) A calculation ofthe total increases, in dollars, by tariff subdivision, projected to an annual basis. Response: The Company has calculated what the impact of the proposed adjustment would have been had it been in place for the twelve months ended June 3, 21. The pro forma impact was calculated utilizing the six-month rolling average BTU by PSP at June 3, 21, compared to the system average ratio of DTH/MCF used to develop volumes in the Company's last base-rate case. The results are shown in detail by tariff subdivision on Attachment E, Part A. For a customer located within a PSP having a higher than system-wide average BTU content in its gas supply, the proposed adjustment factor will increase measured MCFs used for billing and therefore increase the total bill. The increases from the analysis total $4,44,536 (Column 1 of Part A), which will be offset by the decrease as described in the response to (b)(6) below for a net increase in total company revenue of $3,781,786 (Column 11 of Part A), in effect restoring Columbia's reasonable opportunity to earn the revenue authorized by the Commission in the last base rate case. Because the BTU adjustment factor will change each month based upon the then-most-recent sixmonth rolling average for each PSP, it will continually eliminate future disparities caused by different BTU content being delivered to customers residing in different PSPs without causing the Company to exceed the revenues authorized by the Commission in the last rate case. (5) A calculation of the number of customers, by tariff subdivision, whose bills will be decreased.

21 Response: Please see Attachment E which includes in Column 5 of Part B, by tariff subdivision, the number of customers whose bills will decrease as a result ofthe proposed tariff modification. Those customers have services located within PSPs 25, 29 and 26/4 where BTU content is below the system-wide average. (6) A calculation of the total decreases, in dollars, by tariff subdivision, projected to an annual basis. Response: The Company has calculated what the impact of the proposed adjustment would have been had it been in place for the twelve months ended June 3, 21. The pro forma impact was calculated utilizing the six-month rolling average BTU by PSP at June 3, 21, compared to the system average ratio of DTH/MCF used to develop volumes in the Company's last base-rate case. The results are shown on Attachment E, Part A, Column 5. For a customer located within a PSP having a lower than system-wide average BTU content in its gas supply, the proposed adjustment factor will decrease measured MCFs used for billing and therefore decrease the total bill. The decreases from the analysis total $658,75. Because the BTU adjustment factor will change each month based upon the then-most-recent six-month rolling average for each PSP, it will continually eliminate future disparities caused by different BTU content being delivered to customers residing in different PSPs without causing the Company fo exceed the revenues authorized by the Commission in the last rate case. (c) If a public utility files a tariff, revision or supplement which it is calculated will increase the bills of a customer or a group of customers by an amount, when projected to an annual basis, exceeding 3% of the operating revenues of the utility - subsection (b)(4) divided by the operating revenues of the utility for a 12- month period as defined in subsection (b)(2) - or which it is calculated will increase the bills of 5% or more of the number of customers served by the utility - subsection (b)(3) divided by subsection (a)(2) - it shall submit to the Commission with the tariff, revision or supplement, in addition to the statements required by subsections (a) and (b) all ofthe following information: (1) A statement showing the utility's calculation of the rate of return or operating ratio (if the utility qualifies to use an operating ratio under (relating to small water and wastewater utilities)) earned in the 12-month period referred to in subsection (b)(2), and the anticipated rate pf return or operating ratio to be earned when the tariff, revision or supplement becomes effective. The rate base used in this calculation shall be supported by the summaries of original cost for the rate of return calculation. When an operating ratio is used in this calculation, it shall be supported by studies of margin above operation and maintenance expense plus depreciation as referred to in 53.54(b)(2)(B). Response:

22 The proposed change will not amount to an increase in excess of 3% of the total gross annual intrastate operating revenues of Columbia. However, it will affect the bills of more than 5% of the Company's customers. A calculation of the Company's rate of return for the 12-months ended June 3, 21 and the anticipated rate of return are shown on Attachment F. (2) A detailed balance sheet of the utility as of the close of the period referred to in subsection (b)(2). Response: The balance sheet for the 12-months ended June 3, 21 is included as Attachment G. (3) A summary, by detailed plant accounts, of the book value of the property of the utility at the date of the balance sheet required by paragraph (2). Response: Property plant accounts as of June 3, 21 are shown on Attachment H. (4) A statement showing the amount of the depreciation reserve, at the date of the balance sheet required by paragraph (2), applicable to the property, summarized as required by paragraph (3). Response: Depreciation Reserve, by property plant account, as of June 3, 21 is shown on Attachment H. (5) A statement of operating income, setting forth the operating revenues and expenses by detailed accounts for the 12-month period ending on the date of the balance sheet required by paragraph (2). Response: The income statement for the 12-months ended June 3, 21 is included as Attachment D. (6) A brief description of a major change in the operating or financial condition of the utility occurring between the date ofthe balance sheet required by paragraph (2) and the date of the transmittal of the tariff, revision or supplement. As used in this paragraph, a major change is one which materially alters the operating or financial condition ofthe utility from that reflected in paragraphs (1)-(5). Response: There are no major changes to disclose.

23 Columbia Gas of Pennsylvania Historical BTU Values by Pipeline Scheduling Point (PSP) Attachment A Page 1 of 5 Geographic location in CPA Territory PSP Jan-6 Feb-Q6 Mar-6 Apr-6 May-6 Jun-6 Jul-Q6 Auq-6 Sep-6 Oct-6 Nov-6 Dec-6 Monthly BTU values _ State Totals , , , month rolling average State Totals

24 Columbia Gas of Pennsylvania Historical BTU Values by Pipeline Scheduling Point (PSP) Attachment A Page 2 of5 Geographic location in CPA Territory PSP Jan-7 Feb-Q7 Mar-7 Apr-7 May-Q7 Jun-7 Jul-7 Aug-7 Sep-7 Oct-7 Nov-Q7 Dec-7 Monthly BTU values State Totals month rolling average _ State Totals

25 Columbia Gas of Pennsylvania Historical BTU Values by Pipeline Scheduling Point (PSP) Attachment A Page 3 of 5 Geographic location in CPA Territory PSP Jan-8 Feb-8 Mar-8 Apr-8 May-8 Jun-8 Jul-8 Aug-Q8 Sep-8 Oct-8 Nov-8 Dec-8 Monthly BTU vaiues _ State Totals , month rolling average State Totals

26 Columbia Gas of Pennsylvania Historical BTU Values by Pipeline Scheduling Point (PSP) Attachment A Page 4 of 5 Geographic location in CPA Territory PSP Jan-9 Feb-9 Mar-9 Apr-9 May-9 Jun-9 Jul-9 Aug-9 Sep-9 Oct-9 Nov-9 Dec-9 Monthly BTU values , ,977 1, State Totals month rolling average , State Totals

27 Columbia Gas of Pennsylvania Historical BTU Values by Pipeline Scheduling Point (PSP) Attachment A Page 5 of 5 Geographic location in CPA Territory PSP Jan-1 Feb-1 Mar-1 Apr-1 May-1 Jun-1 Jul-1 Aug-1 Monthly BTU values State Totals month rolling average _ State Totals

28 Columbia Gas of Pennsylvania Attachment B Page 1 of 9 CPA State-wide Monthly Weighted Avg Btu ,2 Oct- Jun- Feb- Oct- Jun- Feb- Oct- Jun- Feb- Oct- Jun- Feb- Oct- Jun- Feb- Oct- Jun Normal Btu range Average Btu Rate in last rate case (1.535) Monthly Average Btu Rate

29 Columbia Gas of Pennsylvania Attachment B Page 2 of 9 PSP 25 Btu History , <$><$><$><$) < $ > ( $ > <, < $, $ ^, $ <$> < > < > ( ) ^ o* ^ ^ # ^ & < > $> >$> & ^ # # ^ ^ cf' ^ ^ # ^ ^ of ^ ^ ^ ^ ^ of ^ ^ ^ ^ ^ of ^ # # ^ ^

30 Columbia Gas of Pennsylvania Attachment B Page 3 of 9 PSP 26 Btu History v.-'. ' V ;.'', ' ' "''' ^^V*'^; -LU-^~ I. t^.'^j^ila Month avg (f # # O fe O* # ^ O^ ^ ^ ^ O^ O^ ^ # ^ ^ ^ # ^ ^ ^# ^ O^ N N N N^ b^ ^ ^ ^ of ^ ^ y ^ ^ of ^ # # ^ ^ c? ^ ^ ^ ^ ^ cf ^ f # # ^ ^

31 Columbia Gas of Pennsylvania Attachment B Page 4 of 9 PSP 29 Btu History 1.5 > V < '- 1l ' ' ' ' '' - i ^H- 1 *^ S f '. Z^rf ' *-Vi. ' i"^ -.r-''',-'-s -S-'^'il =- - ^.- -' J,' - V * f*,, > i I' '. l J' '"' i 1, -- "? ^ ^ *' J SH ' * ^ # * ^ ^ ^ ^ ^ ^ ^ ^ ( > # # ( > ^ ^ C? ^ ^ <? ^ <^ ^ N ^ N^ ^ ^ ^ ^ of ^ ^ ^ ^ $ of ^ ^ # ' ^ ^ of ^ # # ' ^ ^ of ^ # # ' ^ ' ^

32 Columbia Gas of Pennsylvania Attachment B Page 5 of 9 PSP 35 Btu History ^ < > $ < > $ <$> ^y Q-J Ky KNJ ^ ^ ^ ^ # ^ ^ - - * * " * ^ ^ ^ ^ ^ *

33 Columbia Gas of Pennsylvania Attachment B Page 6 of PSP 36 Btu History

34 Columbia Gas of Pennsylvania Attachment B Page 7 of PSP 38 Btu History PSP S? $ $>.# < 5^ ^ ^ & J$ $ $ #.# # ^ #.# S?.# r^ r^ r^ ^ ^ ^ ^ ^ ^'W^ ^'^V^^VV^ ^^'V'^VV^ ^V^V'^'VV^ ^\^o^^'#'^'' ^

35 Columbia Gas of Pennsylvania Attachment B Page 8 of PSP 39 Btu History PSP ^ # ^ ^ of ^ ^ ^ ^ ^ of ^ ^ # ^ ^ of ^ ^ ^ ^ ^ of ^ # # ^ ^

36 Columbia Gas of Pennsylvania Attachment B Page 9 of PSP 4 Btu History PSP 4