POWER COMPLIANCE PLAN TO ANNOTATED CODE OF MARYLAND

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3 THE POTOMAC EDISON COMPANY d/b/a ALLEGHENY POWER COMPLIANCE PLAN TO ANNOTATED CODE OF MARYLAND , and AND and SUPPLIER-UTILITY COORDINATION AND UTILITY CONSOLIDATED BILLING INTRODUCTION Annotated Code of Maryland , and , Supplier- Utility Coordination and Utility Consolidated Billing, , Nonresidential Customer Protection and , Residential Customer Protection were adopted at the Maryland Public Service Commission hearing on March 10, 2009, were published in the Maryland Register on March 27, 2009, and became effective on April 6, COMAR specifically requires The Potomac Edison Company d/b/a Allegheny Power ( Allegheny Power or AP ) to submit for approval a Compliance Plan that reflects the implementation of the regulations set forth within the above-mentioned COMAR subtitles. In recognition of this requirement, Allegheny Power has prepared this Compliance Plan, along with revisions to the Allegheny Power Electricity Supplier Coordination Tariff ( Supplier Tariff ) and retail tariff Electric P.S.C. Md. No. 53 ( Retail Tariff ) which outline the system changes and revised procedures that will permit the implementation of the above-mentioned published regulations. The changes to COMAR , , and build on existing practices. Changes to the existing tariffs and practices, and the time and costs associated with the implementation of these particular regulations, will therefore be minimal. COMAR , on the other hand, requires a complete change in the handling of billing and payment of retail supplier charges from existing practices. Therefore, significant time and costs are associated with the implementation of this regulation and Allegheny Power will be seeking cost recovery to implement changes associated with Allegheny Power has identified in each specific compliance plan section the date that the tariff changes will become effective. The effective dates take into consideration all aspects of implementation, including, but not limited to, design and development of the new offerings, Page 1 of 8

4 programming and upgrades to internal systems, testing of the systems and roll-up to retail suppliers. Due to the complexity of the purchase of receivables program, the need for recovery of new costs arising from the new rules, and the internal work hours associated with implementing the program, any changes to this Compliance Plan could result in substantial changes and delays in the development of the program and the internal information technology work which must be completed on various Allegheny Power systems and networks. Accordingly, Allegheny Power requests that the Commission review this Compliance Plan in an expedited manner so that implementation may progress as quickly as possible. Allegheny Power therefore requests that the Compliance Plan be placed on the Administrative Meeting Agenda on June 17, IMPLEMENTATION OF SPECIFIC COMAR REGULATIONS I. Utility Consolidated Billing COMAR Section 12.0, Retail Customer Billing and Payment Collection, of the Supplier Tariff and Rule 10 of the Retail Tariff have been modified to reflect the changes to COMAR , Utility Consolidated Billing. Section 12.1 reflect the regulation as adopted in COMAR (A). This regulation changes the selection of utility consolidated billing or separate supplier billing from the customer to the retail supplier. A new section, Section Billing and Payment Data Access, has been added to the Supplier Tariff and reflects COMAR (B through E) which requires electronic data exchange of billing information between Allegheny Power and retail suppliers, and the same access to customer bills for retail suppliers as is provided to the customer. Electricity Supplier Consolidated Billing (Bill Ready Option) from Section 12.4 of the current Supplier Tariff and Rule 10(a)(1)(iv) of the current Retail Tariff was removed as it was not a consideration of these regulations. Since these regulations reiterate existing practices for consumption, billing, and related data that facilitate the 1 In the event that this Compliance Plan can not be placed on the Administrative Meeting Agenda on June 17, 2009, Allegheny Power respectfully requests that the matter not be addressed on the June 24, 2009 Administrative Meeting Agenda as Allegheny Power personnel critical to the discussion and implementation of this matter will not be available during the week of June 22, Allegheny Power appreciates the Commission s consideration of this scheduling matter. Page 2 of 8

5 billing process, additional costs and time for the establishment of these regulations are minimal and implementation of these regulations can be effective immediately. Allegheny Power is therefore not requesting additional cost recovery for this portion of the implementation at this time 2 and requests an effective date, for these sections of the Supplier Tariff and Retail Tariff, of June 17, II. Utility Responsibilities in the Event of Supplier Default COMAR To address the concept of a sudden exit from the market by a retail supplier, COMAR establishes the conditions that identify a defaulted supplier. The Supplier Tariff addresses noncompliance and default in Section 6.0. A new subsection 6.3 has been added to the Supplier Tariff to address COMAR (A), which establishes conditions that define a defaulted retail supplier as one who is unable to deliver electricity because the Commission revokes or suspends the supplier s retail electricity license or who may not transact sales through the regional transmission organization. Subsequently, existing Sections 6.2 (a and b) were removed to eliminate redundancy and the old section 6.3 was renumbered to 6.4. COMAR regulations (B, C, D) require that a retail supplier using utility consolidated billing, is obligated to provide the utility with information necessary to allow the utility to continue consolidated billing through the conclusion of the billing cycle in which the default occurred. The defaulted retail supplier is prohibited from issuing bills to persons who were customers at the time of the default unless specifically authorized by the Commission. Additionally, a defaulted retail supplier and the utility shall abide by the Maryland Supplier Coordination Agreement. Section , Utility Responsibility in the Event of Supplier Default, of the Supplier Tariff enhances the existing processes for handling and billing a defaulted supplier s customers. The procedural changes that are required by COMAR should a retail supplier default, do not directly impact the electronic systems already established for billing 2 Of course, Allegheny Power does not waive cost recovery and would expect to recover its costs for complying with these and the other relatively simple rules changes in the ordinary course at the appropriate time e.g., in the Company s next base rate case. Page 3 of 8

6 retail supplier charges. Therefore, additional costs and time for the establishment of these regulations are minimal and implementation of these regulations can be effective immediately. Allegheny Power is therefore not requesting additional cost recovery for this portion of the implementation at this time and requests an effective date, for these sections of the Supplier Tariff, of June 17, III. Utility Purchased Receivables or Pro-rated Payments COMAR COMAR requires a utility providing utility consolidated billing to either purchase the receivables of a retail supplier or to pro-rate customer payments between the utility and the retail supplier. Allegheny Power evaluated the two options and determined that it will purchase the receivables of a retail supplier, without recourse, associated with retail supplier sales of generation and transmission services to customers within Allegheny Power s Maryland service territory when the supplier chooses to use utility consolidated billing. Section Purchase of Receivables has been added to the Supplier Tariff and Rule 10(a)(7)(ii)5 has been added to the Retail Tariff to codify that Allegheny Power will purchase receivables when a retail supplier elects to use utility consolidated billing. Allegheny Power will reimburse retail suppliers for their customer billings regardless of whether Allegheny Power receives payment from the customer, subject to the limitations set forth below: Retail suppliers that choose Allegheny Power s rate-ready or bill-ready consolidated billing option for all or a portion of their customer accounts shall be required to sell their accounts receivables to Allegheny Power for those customers for whom Allegheny Power issues a consolidated bill. Retail suppliers may continue to issue their own bills (dual billing) for commodity service, for all or a portion of their customers, but will not be eligible to participate in the Purchase of Receivables ( POR ) program for those customers that receive dual billing. Allegheny Power shall pay all undisputed charges to the retail suppliers by the 5 th day from the due date noted on the consolidated bill. Page 4 of 8

7 If the retail supplier s customer is on a budget or levelized payment plan, Allegheny Power shall only be obligated to purchase, each month, the amount of the monthly installment under the budget or levelized payment plan. Allegheny Power shall also purchase the accounts receivable of retail supplier's customers based upon an estimated bill. Allegheny Power shall add to or deduct from any payments due to retail suppliers amounts that may result from reconciliations, adjustments or recalculations of budget or levelized plans, estimated readings, cancel and rebills or any applicable billing adjustment. Retail supplier receivables shall be treated the same manner as Allegheny Power s charges. Allegheny Power is entitled to receive and retain all payments from customers. Allegheny Power is authorized to conduct collection activities and, if necessary, terminate its delivery service and retail supplier commodity service to customers whose accounts receivables were purchased and who fail to make payment of amounts due on the consolidated bill, including the amount of the purchased retail supplier receivables. In the event a customer disputes a retail supplier s charges and notifies Allegheny Power (or the Commission notifies Allegheny Power), Allegheny Power can withhold the disputed amount from that retail supplier until such time that Allegheny Power is notified by the customer, or the Commission, that the dispute has been resolved. POR Plan Costs Allegheny Power s POR plan costs include billing system and interface changes that will provide for the new handling of retail suppliers receivables and payments and the modifications to customer payment and collection methods. A list of developmental hours and costs that are estimated to implement the program to purchase retail supplier receivables is shown below. Action Estimated Time (hours) Estimated Costs 1. Purchase receivables with payment date set at 5 days 40 $ 3,400 Page 5 of 8

8 after the posted customer due date 2. Purchase retail supplier pre-existing receivables 120 $ 10, Develop report to track final accounts with supplier dollars 20 $ 1,700 Change A/R Amortization process to include supplier 4. charges in payment agreements and remove split from 500 $ 42,500 the balance due. 5. Include past due supplier dollars with AP past due dollars in CCS. 120 $ 10, Include past due supplier dollars on reminder/termination/cut off notices 120 $ 10, Change utility/supplier payment posting to period by period posting 100 $ 8,500 Change automated processes to request security deposit 8. based on total charges for consolidated billing and 240 $ 20,400 override if the supplier billing is dual 9. Change automated charge-off to include supplier charges 250 $ 21, Change rate ready budgets to pay supplier A/R dollars rather that budget dollars so the supplier will always be whole. Bill Ready bill supplier dollars will always be 300 $ 25,500 made whole. 11. Change Account Payable Interface to not send A/R update transactions to accounts payable 80 $ 6, Add Societal Benefits Charge to MD Customer Bills 120 $ 10, Implement Final Bill Transfer of Supplier Money 80 $ 6,800 Bill Print Changes -- Average Payment, Amortization $ 8,500 Company and Supplier 15. Report modifications (4) 160 $ 13, Change reinstatement for charge-off to active company 200 $ 17, Report of cancel/rebill of accounts in which the supplier is gone. 100 $ 8, Hold disputed supplier dollars for payment until resolved with customer and supplier 500 $ 42, Create report maintaining sold account dollars for suppliers 100 $ 8, Charge penalty on supplier dollars (BRB) accounts 200 $ 17, Accounting Updates required to Accounting interface 20 $ 1,700 Apply energy assistant money to supplier dollars to $ 21,250 show on split of payment grant money Page 6 of 8

9 23. Project management 450 $ 38,250 Based on these estimates, Allegheny Power requires approximately 4,170 developmental hours to complete this project, at an implementation cost of $354,450. Because the Commission is now requiring the utilities to buy retail suppliers receivables in order to remove what has been alleged to be a barrier to providing the benefits of retail choice to customers, Allegheny Power proposes to implement a Societal Benefits Charge ( SBC ) assessed to customers to recover the implementation and management of the POR plan and uncollectibles associated with the POR plan. The SBC will be comprised of three parts; (1) POR uncollectible charges, (2) AP administrative charges, and (3) a true-up for over- or undercollected charges based on a prior 12-month period. The initial SBC through May 31, 2010 will not include POR uncollectibles or administrative charges as there is no data available to determine that effectively; but instead the previously described developmental costs will be included in the initial SBC. Beginning June 1, 2010, the SBC will include the prior period actual POR uncollectibles, actual administrative charges, and a true-up for prior period over- or undercollected charges. POR uncollectibles for each class will be determined by the outstanding POR charges determined for write-off. These charges will also include money that cannot be collected because of retail supplier default or cancel/rebill uncollectibles. The SBC will be placed as a line item on monthly bills beginning December 15, 2009, and will be adjusted annually each June 1 st to reflect variables in associated costs and the over- or under-collected charges. Allegheny Power will annually submit the revised SBC to the Commission thirty (30) days before its effective date. Given the breadth and the time required to implement the purchase of receivables program proposed by Allegheny Power, the date projected for implementation is December 15, Proper designing, programming and testing are necessary to assure that all of our customers are billed properly, especially as it relates to retail supplier charges, and that suppliers are paid accurately and on time, whether or not Allegheny Power receives payment from the customer. The development, upgrading and programming involved in implementing this program does not occur in a vacuum. Day-to-day business, in addition to several major projects Page 7 of 8

10 in Maryland, pull from the same IT resources as those needed to implement this program. Therefore, major modifications, delays in approval and/or long negotiations revolving around the implementation of this program will cause the implementation date to be delayed since, as based on the estimated time required to complete this task, it is an aggressive schedule. Accordingly, Allegheny Power is also filing revised Supplier Tariff and Retail Tariff pages associated with these changes for approval; each to become effective December 15, Section Payment Posting has been added to the Supplier Tariff and Rule 10(a)(7)(ii)5 has been provided in the Retail Tariff to continue the posting of a partial payment remittance in accordance with the current payment posting practices until POR is implemented on the projected date. IV. Cancellation of Supply Service and Notice of Contract Expiration or Cancellation COMAR and A statement reflecting COMAR , Cancellation of Supply Service, and , Notice of Contract Expiration or Cancellation, has been added to the Supplier Tariff Section 7.7 and the Retail Tariff Rule 22(g), Customer Designation to Control, to specify the requirement to process drop transactions only if directed by the retail supplier subject to applicable bankruptcy law. The procedural changes that are required to implement these regulations are minimal and do not directly impact the electronic systems. Implementation can be effective immediately. Allegheny is therefore not requesting additional cost recovery for this portion of the implementation at this time and requests an effective date, for this section of the Supplier Tariff and Retail Tariff, of June 17, Page 8 of 8

11 THE POTOMAC EDISON COMPANY Electric P. S. C. Md. No. 53 Doing Business As NinthTenth Revision of ALLEGHENY POWER Original Page No. 3-1 Canceling EighthNinth Revision of Original Page No. 3-1 INDEX (Continued) SCHEDULE PAGE Terms (Continued) 12. Payments Use of Electricity Interruption To Service Supplied By The Company Discontinuance of Service Company's Right to Disconnect Service Reconnection of The Supply of Electricity Terms and Conditions Governing Extension of Facilities Utility Service Protection Program Imposed Relocations or Undergrounding Default Electricity Supply Service Changing Electric Suppliers Back-Up Supply For Self-Generators Universal Service Program Surcharge...5 CoGeneration PURPA Project Surcharge Franchise Tax Surcharge Issued August 4, 2008May 21, 2009 Effective December 15, 2008June 17, 2009 Approved by Maryland Public Service Commission Letter Order dated October 8, 2008

12 THE POTOMAC EDISON COMPANY Electric P. S. C. Md. No. 53 Doing Business As TwelfthThirteenth Revision of ALLEGHENY POWER Original Page No. 3-2 Canceling EleventhTwelfth Revision of Original Page No. 3-2 INDEX (Continued) SCHEDULE PAGE Rate Transition Surcharge Montgomery County Fuel Energy Local Tax Adjustment Residential Energy Conservation Surcharge Maryland Environmental Surcharge Energy Conservation Surcharge Deferred Fuel Credit Clean Air Act Recovery Surcharge Temporary Mitigation Surcharge Earnings Sharing Credit Societal Benefits Charge Energy Conservation Surcharge Credit Retail Customer and Third-Party Retail Fees and Services Customer Choice Credit Administrative Credit Energy Cost Adjustment Surcharge Residential Service - General... R...6 General and Commercial Service...(Restricted)... C...7 General Service... G...8 ISSUED BY DAVID E. FLITMAN,W. MCDONALD, VICE PRESIDENT Issued May 23, 2008 June 1, 20087, 2009 To become effective on all service rendered on or after21, 2009 Effective Approved at Public Service Commission Administrative Meeting of May 28, 2008 in Case Nos. 8908, 9056, and 9064

13 THE POTOMAC EDISON COMPANY Electric P. S. C. Md. No. 53 Doing Business As SixthSeventh Revision of ALLEGHENY POWER Original Page No. 4-9 Canceling FifthSixth Revision of Original Page No METERING AND BILLING RULES AND REGULATIONS COVERING THE SUPPLY OF ELECTRIC SERVICE (a) Billing Services for Competitive BillingPower Supply. (1) Retail Customer Billing Options. The Customer has the option to choose whether the Company or the certifiedan Electricity Supplier will render a consolidated bill (including Company and certified Electricity Supplier charges) or whether may elect to use Company Consolidated Billing (One Bill Option) or to have the Customer receive separate bills from the Company and the certified Electricity Supplier. When the Company provides billing for competitive retail electric Service on behalf of a certified Electricity Supplier, the Company shall not be responsible for billing errors resulting from incorrect price information received from a certified Electricity Supplier. (Two Bill Option). The certified Electricity Supplier shall notify the Company of the Customer s billing Serviceits choice of billing service option when notifying the Company of the Customer s switch.enrollment. If a Customerthe Electricity Supplier changes theirits billing service option for a Customer after initial enrollment, the certified Electricity Supplier must notify the Company of the change at least 17ten (10) days prior to the Company s Customer s scheduled meter read date. If the certified Electricity Supplier fails to notify 17the Company ten (10) days prior to the scheduled meter read date, the billing service option change will take effect on the following scheduled meter read date. All Customers will have the opportunity to choose from the following billing Service options: (i) Separate Company/Electric Supplier Billing. 2) The Company and the certified Electricity Supplier will separately send their bills directly to the Customer. The Company will calculate its charges, prepare the bill, and render the bill consistent with its standard billing practices. This billing method is the sole responsibility of the Company and its Customers, and is independent of the certified Electricity Supplier billing. For Customers the Company will deliver the bill by mail, unless the Customer agrees to some other form of billing Service provided by the Company. The Company has no obligations regarding accuracy of certified Electricity Supplier charges or related payment disputes. (3) The Company will be responsible for performing meter reading Services, and shall provide to the certified Electricity Supplier Customer usage data that will allow a certifiedan Electricity Supplier to bill Customers in a timely manner for capacity and energy that is consistent with the load obligation assigned to the certified Electricity Supplier by the Company. (4) The Company will collect and process Customer payments consistent with applicable Commission Orders, Rules, and Regulations. The Company and the certified Electricity Supplier shall process all complaints and perform Customer Servicesservices in accordance with applicable Commission Orders, Rules, and Regulations. (5) Regardless of whether the One Bill Option or the Two Bill Option is selected, Customers who shop for Competitive Power Supply will be considered by the Company to be delinquent in the payment of their bill if the Company s charges for electric service remain unpaid at the time they are due. Delinquent bills will be subject to the Company s termination provisions for non-payment, and may result in the imposition of late payment fees and the initiation of electric service termination procedures for non-payment. The Company will not initiate its electric service termination procedures for non-payment of charges payable to an Electricity Supplier unless such charges become Company charges as described in Rule 10(a)(7)(ii)5 of this Tariff.

14 (6) The Company may impose late payment fees in accordance with its procedures on the portion of the bill that is ultimately due to the Company. The late payment fee will be collected consistent with Rule 12 of this Tariff. Issued December 30, 2008May 21, 2009 Effective February 18, 2009 Approved at Public Service Commission Administrative Meeting of February 18June 17, 2009

15 THE POTOMAC EDISON COMPANY Electric P. S. C. Md. No. 53 Doing Business As SixthSeventh Revision of ALLEGHENY POWER Original Page No Canceling FifthSixth Revision of Original Page No RULES AND REGULATIONS COVERING THE SUPPLY OF ELECTRIC SERVICE 10. METERING AND BILLING (Continued) (ii) Company Consolidated Billing (Rate Ready Option). Under this option the Company will calculate both the Company and certified Electricity Supplier charges and render a consolidated bill to the Customer. The Company will collect and process Customer payments consistent with applicable Commission Orders, Rules, and Regulations. Payments will be submitted to the certified Electricity Supplier normally within one day of receipt from the Customer. The Company shall process all complaints and perform Customer Service in accordance with applicable Commission Orders, Rules, and Regulations. (iii) Company Consolidated Billing (Bill Ready Option). The Company will provide to the certified Electricity Supplier Customer usage data that will allow a certified Electricity Supplier to bill Customers in a timely manner for capacity and energy that is consistent with the load obligation assigned to the certified Electricity Supplier by the Company normally within one business day of the actual meter reading or the estimating of usage. The certified Electricity Supplier is responsible for calculating its charges and submitting the charges to the Company in accordance with applicable Commission Orders, Rules, and Regulations. If the certified Electricity Supplier fails to transmit its Customers information to the Company in the required timeframe, the Company will render a bill containing only its charges. The Company will not be liable for the certified Electricity Supplier s charges or losses, damages or consequential damages associated with the certified Electricity Supplier s Customers not being billed for the certified Electricity Supplier s charges for that period. The Company will collect and process Customer payments consistent with applicable Commission Orders, Rules, and Regulations. Payments will be submitted to the certified Electricity Supplier normally within four days of receipt from the Customer. The Company and the certified Electricity Supplier shall process all complaints and perform Customer Service in accordance with applicable Commission Orders, Rules, and Regulations. (7) Electricity Suppliers will have the opportunity to choose from the following billing service options: (i) Two Bill Option Separate Company/Electricity Supplier Billing 1. The Company and the Electricity Supplier will separately send their bills directly to the Customer. The Company will calculate its charges, prepare the bill, and render the bill consistent with its standard billing practices. This billing method is the sole responsibility of the Company and its Customers, and is independent of the Electricity Supplier billing. The Electricity Supplier will calculate its charges, prepare its bill, and render the bill consistent with its standard billing practices. The Company has no obligations regarding

16 the accuracy of Electricity Supplier charges or related payment disputes. 2. The Company is not responsible for collection of amounts receivable by the Electricity Supplier. (ii) One Bill Option Company Consolidated Billing. 1. The Company shall render a single consolidated bill with Customer charges for both the Company and the Electricity Supplier separately stated. If the One Bill Option is selected, the Company will provide the functions of collection and remittance of funds. 2. The Company shall not be responsible for billing errors resulting from incorrect information received from an Electricity Supplier and will not be responsible for any default or failure of the Electricity Supplier to provide Service. 3. The Company will accept and rely on the representation of the Electricity Supplier as to the information supplied to the Company by the Electricity Supplier. The Company will have no responsibility to verify the appropriateness of such information, or to resolve any disputes or disagreements over the amount, timing or any other aspect of the billing, other than to confirm amounts billed to the Customer, amounts received from the Customer and amounts remitted to the Electricity Supplier. The Electricity Supplier is responsible for the bill content transmitted to the Company. 4. The Electricity Supplier shall have access to Customer billing and payment information from the Company for the Electricity Supplier s presently enrolled Customers. The Company shall provide the Electricity Supplier with the same electronic access to Customer bill information that it provides to the Customer. Issued December 30, 2008May 21, 2009 Effective February 18, 2009 Approved at Public Service Commission Administrative Meeting of February 18June 17, 2009

17 THE POTOMAC EDISON COMPANY Electric P. S. C. Md. No. 53 Doing Business As ThirdFourth Revision of ALLEGHENY POWER Original Page No Canceling SecondThird Revision of Original Page No RULES AND REGULATIONS COVERING THE SUPPLY OF ELECTRIC SERVICE 10. METERING AND BILLING (Continued) (iv) Electricity Supplier Consolidated Billing (Bill Ready Option). The certified Electricity Supplier is responsible for meeting the applicable COMAR requirements for billing practices until the Commission adopts standardized Electricity Supplier Consolidated Billing procedures. The Company will provide information to the certified Electricity Supplier on the Company s charges for inclusion on the certified Electricity Supplier s consolidated bill using the Company s existing EDI formats or other means deemed necessary in the interim. The certified Electricity Supplier will collect and process Customer payments consistent with applicable Commission Orders, Rules, and Regulations. Payments will be submitted to the Company normally within one day of receipt from the Customer. The certified Electricity Supplier and the Company shall process all complaints and perform Customer Service in accordance with applicable Commission Orders, Rules, and Regulations. A temporary work around will be implemented for Electricity Supplier Consolidated Bill Ready Billing for July 1, This work around will involve the Company faxing the Customer s current charges for inclusion on the certified Electricity Supplier s consolidated bill. The certified Electricity Supplier will remit payment to the Company by mailing the bill stub along with payment to the Company. This work around is limited to 50 Customers per certified Electricity Supplier, and will remain in effect until standardized Electricity Supplier Consolidated Billing can be implemented. The target date for standardized Electricity Supplier Consolidated Billing is January 1, This date is contingent on Commission approval of the designated working group s final report. (2) Subject to operating constraints described above, competitive billing shall begin pursuant to House Bills 366 and 703. The credit for Customers utilizing Electricity Supplier Consolidated Billing are at rates set forth below: Rate Schedule Credit R ($0.90) C, G, C-A, CSH, Hagerstown, Frederick ($1.19) PH, AGS ($3.48) PP, Westvaco ($21.61) OL, AL, MSL, SL, EMU, MU, EM, PQ ($0.88) 5. Effective December 15, 2009, the Company will purchase the Electricity Supplier s Competitive Power Supply receivables. If the Customer is on the Average Payment Plan, the Company shall only be obligated to purchase each month the amount of the monthly installment under the Average Payment Plan. The Company shall also purchase the Electricity Supplier s Competitive Power Supply receivables for an estimated bill. Purchased Electricity Supplier Competitive Power Supply receivables will be treated in the same manner as other Company charges pursuant to this Tariff. In the event an Electricity Supplier converts a Customer from the One Bill Option to the Two Bill Option, the Electricity Supplier and Company will each be responsible for its own receivables effective as of the start of the Two Bill Option. The Company will not purchase an

18 Electricity Supplier s Competitive Power Supply receivables incurred prior to the Electricity Supplier s election to use the One Bill Option. Prior to December 15, 2009, Customer payments to the Company under the One Bill Option will be applied in the following sequence for all of the items that apply at the time of receipt of the Customer s payment: (a) Company tariffed charge arrearages and any associated interest and any unpaid fees or charges; (b) Electricity Supplier arrearages and any associated fees or interest; (c) Company current tariffed charges; (d) Electricity Supplier current charges; and (e) charges for items other than electric services 6. The Electricity Supplier must provide the applicable billing information to the Company according to the Rate Ready Option or Bill Ready Option. Rate Ready Option: The Company will calculate both the Company and Electricity Supplier charges and render a consolidated bill to the Customer. Customers will be rendered a bill for Electricity Supplier and Company charges normally within three (3) business days of the meter reading. Bill Ready Option: The Electricity Supplier receives the usage information from the Company and calculates its own Customer charges accordingly. The Electricity Supplier is responsible for calculating its charges and submitting the charges to the Company within three (3) business days of receipt of the Customer meter read data. If the Electricity Supplier fails to transmit its Customers information to the Company in the required timeframe, the Company will render a bill containing only its available charges. The Company will not be liable for the Electricity Supplier s charges or losses, damages or consequential damages associated with the Electricity Supplier s Customers not being billed for the Electricity Supplier s charges for that period. ISSUED BY JOSEPH H. RICHARDSON,DAVID W. MCDONALD, VICE PRESIDENT Issued February 6, 2006May 21, , 2009 Effective March 15, 2006June Approved at Public Service Commission Administrative Meeting of March 8, 2006

19 THE POTOMAC EDISON COMPANY Electric P. S. C. Md. No. 53 Doing Business As ThirdFourth Revision of ALLEGHENY POWER Original Page No Canceling SecondThird Revision of Original Page No RULES AND REGULATIONS COVERING THE SUPPLY OF ELECTRIC SERVICE 10. METERING AND BILLING (Continued) (h) Residential Rate Schedule Customers have the option of using the Company s Average Payment Plan wherein billing for Company Charges will be based upon 1/12 of the Customer s latest twelve Months usage. Any difference between the average payments and the actual charges for the 12 Month average payment period will be amortized over the next twelve (12) Month period. If a participant in the Average Payment Plan accumulates two or more termination of Service notices within a 12 Month period, the Company shall have the option of terminating the Customer s participation in the plan. For the Rate Ready Option described in Rule 10(a)(7)(ii)6 of this Tariff, the Company shall only be obligated to purchase each month the amount of the monthly installment under the Average Payment Plan. For the Bill Ready Option described in Rule 10(a)(7)(ii)6 of this Tariff, the Customer s bill will be adjusted to reflect the Company s regulated non-supply charges and the full amount of the Electricity Supplier charges submitted. (i) For Customer s with monthly billing demands under 300 kw, the Company shall own and install metering equipment for any Customer requesting non-standard metering from the Company. The Customer shall pay all costs associated with the removal and testing of any existing electric metering equipment, the installation and testing of the non-standard metering equipment, and all incremental costs of non-standard metering Services above those charges that the Company has included in its tariffs for standard metering. The non-standard metering will be used for determining loads starting with the first meter read date following the installation. The Company shall provide, but the Customer shall pay, for the installation, operation and maintenance of the required compatible communication link in order to transmit the metered information to the Company. All non-standard meters shall be installed and owned by the Company and shall be used for billing, capacity obligation determination, transmission obligation determination, and energy reconciliation. All non-standard meters used for billing, whether required by the Company or requested by the Customer, will be maintained and tested by the Company in accordance with applicable Commission Orders, Rules, and Regulations. Additional Services requested by the Customer and approved by the Company will be provided at charges as provided by the Company. (j) Data Pulses. Demand pulse signals and/or synchronizing time signals will be provided by the Company to any Customer, or upon Customer consent a Customer s Electricity Supplier as defined by the Public Utility Companies 1-101(j) of the Maryland Code. The Customer makes a one time payment for the installation of wiring and equipment necessary to provide any of the following signal options: Demand Pulse Signal $ Synchronizing Time Signal $ Both Signals $ If the Customer s load control equipment is dependent on data obtained from metering transformers, transducers, thermal converters or other solid-state metering devices, the above charges will be determined on a case-by-case basis. The Customer is responsible for any additional costs associated with signal equipment maintenance and/or changes in signal equipment resulting from a change in the Customer s load. ISSUED BY BRUCE E. WALENCZYKDAVID W. MCDONALD, VICE PRESIDENT

20 Issued March 5, 2002May 21, 2009 Effective April 4, 2002June 17, 2009 Approved at the Public Service Commission Administrative Meeting of April 3, 2002 implementing Order No in Case No. 8738

21 THE POTOMAC EDISON COMPANY Electric P. S. C. Md. No. 53 Doing Business As SecondThird Revision of ALLEGHENY POWER Original Page No Canceling FirstSecond Revision of Original Page No RULES AND REGULATIONS COVERING THE SUPPLY OF ELECTRIC SERVICE 22. CHANGING ELECTRIC SUPPLIERS (Continued) (f) Transaction Error Handling. An Electricity Supplier shall notify the Company of an enrollment or drop error via an Electronic Data Interchange cancel transaction no later than five days after the enrollment or drop transaction is initiated by the Electricity Supplier. The Company shall process the cancel transaction and return the Customer to the Customer s enrollment state before the erroneous transaction. (1) Incumbent Electricity Supplier-Identified Erroneous Transactions. If an erroneous transaction is identified by the incumbent Electricity Supplier, the incumbent Electricity Supplier shall, upon verifiable consent of the Customer, cancel the pending enrollment by notifying the Company by an Electronic Data Interchange cancel transaction within 24 hours of the Customer s consent and not later than five days after the erroneous enrollment of drop transaction is received by the Company. Initiation of the Electronic Data Interchange cancel transaction by the incumbent Electricity Supplier without the verifiable Customer consent is considered an unauthorized enrollment of the Customer with the incumbent Electricity Supplier. (2) Electronic Cancel Transactions Received Later Than Five Days. Electronic cancel transactions received from the incumbent Electricity Supplier later than five days after the erroneous enrollment or drop transaction is received by the Company will be rejected. (g) Customer Designation to Control. The Electricity Supplier acknowledges and agrees that the Company will give effect to all Customer requests to change to a new Electricity Supplier, and consequently the last Customer designation of an Electricity Supplier, for which the procedures under Section 22(c) have been completed, will be given effect by the Company. Except as otherwise provided in this Tariff, the Company shall remove a Customer from Electricity Supplier services only if directed by the Electricity Supplier, subject to applicable bankruptcy law. (h) Certified Supplier Billing and Payment (1) Billing: The Customer s certified Electricity Supplier will notify the Company whether the certified Electricity Supplier will bill the Customer directly for generation Services provided (Two Bill Option), or whether the Company should bill the Customer for Service provided by the certified Electricity Supplier and remit such billing amount to the certified Electricity Supplier (One Bill Option). If the One Bill Option is selected, the Company will provide the functions of collection and remittance of funds only as a conduit of those funds from the Customer to the certified Electricity Supplier. The Company will not be responsible for any default or failure to provide Service or failure to pay for Service as a consequence of its performance of this role. Issued August 4, 2008 Effective December 15, 2008 Approved by Maryland Public Service Commission Letter Order dated October 8, 2008

22 THE POTOMAC EDISON COMPANY Electric P. S. C. Md. No. 53 Doing Business As First Revision of ALLEGHENY POWER Original Page No Canceling Original Page No RULES AND REGULATIONS COVERING THE SUPPLY OF ELECTRIC SERVICE 22. CHANGING ELECTRIC SUPPLIERS (Continued) (2) Payments To The Company: Payments to the Company will be applied to the Customer s accounting the following sequence for all of the items that apply at the time of receipt of the Customer s payment. (i) Company tariffed charge arrearages, any associated interest and any unpaid fees or charges. (ii) Certified Electricity Supplier arrearages, and any associated fees or interest. (iii) Company current tariffed charges. (iv) Certified Electricity Supplier current charges. (v) Charges for items other than electric Services. (3) Disputes: If the One Bill Option is selected, the Company will accept and rely on the representation of the certified Electricity Supplier as to the rates supplied to the Company by the certified Electricity Supplier. The Company will have no responsibility to verify the appropriateness of such amounts, or to resolve any disputes or disagreements over the amount, timing or any other aspect of the billing or payment of charges, other than to confirm amounts billed to the Customer, amounts received from the Customer and amounts remitted to the certified Electricity Supplier. (4) Non-Payment or Partial Payment: Regardless of whether the Two Bill Option or the One Bill Option is selected, Customers who shop for generation Services will be considered by the Company to be delinquent in the payment of their bill if the Company s charges for electric Service remain unpaid at the time they are due. Delinquent bills will be subject to the Company s termination provisions for non-payment, and may result in the imposition of late payment fees and the initiation of electric Service termination procedures for non-payment. The Company will not initiate its electric Service termination procedures for non-payment of charges payable to a certified Electricity Supplier. (5) Late Payment Fees: The Company may impose late payment fees in accordance with its procedures on the portion of the bill that is ultimately due to the Company, excluding any amount it has billed to the Customer on behalf of a certified Electricity Supplier. If the Company is collecting late payment fees on behalf of the Electricity Supplier under the Company rate ready one bill option, the Electricity Supplier s late payment fee will be collected at the same rate as the Company. The late payment fee will be collected consistent with rule number 12 of this tariff for all charges. The Electricity Supplier may elect to not have a late penalty applied to their charges under this billing option. Issued August 4, 2008 Effective December 15, 2008 Approved by Maryland Public Service Commission Letter Order dated October 8, 2008

23 THE POTOMAC EDISON COMPANY Electric P. S. C. Md. No. 53 Doing Business As First Revision of ALLEGHENY POWER Original Page No Canceling Original Page No RULES AND REGULATIONS COVERING THE SUPPLY OF ELECTRIC SERVICE 22. CHANGING ELECTRIC SUPPLIERS (Concluded) (6) Collection Activity: The Company is not responsible for collection of amounts receivable by the certified Electricity Supplier. 23. BACK-UP SUPPLY FOR SELF-GENERATORS Service for Standby (Back-Up) or Maintenance purposes is available under the Company s Alternative Generation Schedule, Schedule AGS. Retail Customers, who sell any portion of their on-site, self-generation into the market, may not replace that generation with supplementary Service supplied under any schedule in this Tariff. Such replacement power will be provided at a rate determined by contract. Issued May 21, 2009 Effective June 17, 2009

24 THE POTOMAC EDISON COMPANY Electric P. S. C. Md. No. 53 Doing Business As Second Revision of ALLEGHENY POWER Original Page No Canceling First Revision of Original Page No This page intentionally left blank Issued August 4, 2008May 21, 2009 Effective December 15, 2008June 17, 2009 Approved by Maryland Public Service Commission Letter Order dated October 8, 2008

25 THE POTOMAC EDISON COMPANY Electric P. S. C. Md. No. 53 Doing Business As Second Revision of ALLEGHENY POWER Original Page No Canceling First Revision of Original Page No This page intentionally left blank Issued May 21, 2009 Effective June 17, 2009

26 THE POTOMAC EDISON COMPANY Electric P.S.C. Md. No. 53 Doing Business As SecondThird Revision of ALLEGHENY POWER Original Page No Canceling FirstSecond Revision of Original Page No With the effective date appearing below, the Earnings Sharing Credit Is hereby canceled. ISSUED BY BRUCE E. WALENCZYK, VICE PRESIDENT Issued January 11, 2002 To become effective on all

27 SOCIETAL BENEFITS CHARGE In addition to the charges specified in this Tariff, there shall be a Societal Benefits Charge that applies to all Customers eligible to receive the Service Types of Residential SOS, Type I SOS, Type II SOS and Hourly-Priced LCS. The purpose of the Societal Benefits Charge is to recover implementation, administrative, and uncollectible costs associated with the purchase of Competitive Power Supply receivables. The resulting charge shall be shown as a separate item on bills rendered onto Customers and shall be applied regardless of the Customer s election of Competitive Power Supply. or after January 9, 2002 Approved by the Commission letter dated February 7, 2002 The Societal Benefits Charge is calculated for the 12-month period beginning each June 1. The charge is a rate per kilowatt-hour and is calculated by dividing the costs allocated to each Service Type by the distribution kilowatt-hour sales expected for the same Service Type. The calculation includes a reconciliation factor adjustment, and an adjustment for gross receipts tax and the Commission assessment factor. Changes to the charge will be filed with the Commission by May 1 to become effective the forthcoming twelve month period beginning June 1. The resulting charge is in addition to any minimum charge set out in the Rate Schedule and is added to the Customer s bill before any surcharge is levied against the Customer s total bill. Amounts billed hereunder shall be subject to late pay charges. Bills for Customers eligible to receive the following Service Types shall include an amount equal to the charge rate times the number of distribution kilowatt-hours as follows: Service Type Rate per kwh Residential SOS $ Type I SOS $ Type II SOS $ Hourly-Priced LCS $ The reconciliation factor corrects for over/under-collection of implementation, administrative, and uncollectible costs associated with the purchase of Competitive Power Supply receivables. Respective to each Service Type, the differences between actual costs incurred and revenues collected from the charge for the twelve month period ending March 31 are included in the reconciliation factor. The reconciliation factor is debited or credited against the charges eligible for recovery through the Societal Benefits Charge beginning June 1. Issued May 21, 2009 To become effective on all service rendered on or after December 15, 2009

28 THE POTOMAC EDISON COMPANY Electric P. S. C. Md. No. 53 Doing Business As Tenth Revision of ALLEGHENY POWER Original Page No. 3-1 Canceling Ninth Revision of Original Page No. 3-1 INDEX (Continued) SCHEDULE PAGE Terms (Continued) 12. Payments Use of Electricity Interruption To Service Supplied By The Company Discontinuance of Service Company's Right to Disconnect Service Reconnection of The Supply of Electricity Terms and Conditions Governing Extension of Facilities Utility Service Protection Program Imposed Relocations or Undergrounding Default Electricity Supply Service Changing Electric Suppliers Back-Up Supply For Self-Generators Universal Service Program Surcharge...5 CoGeneration PURPA Project Surcharge Franchise Tax Surcharge Issued May 21, 2009 Effective June 17, 2009

29 THE POTOMAC EDISON COMPANY Electric P. S. C. Md. No. 53 Doing Business As Thirteenth Revision of ALLEGHENY POWER Original Page No. 3-2 Canceling Twelfth Revision of Original Page No. 3-2 INDEX (Continued) SCHEDULE PAGE Rate Transition Surcharge Montgomery County Fuel Energy Local Tax Adjustment Residential Energy Conservation Surcharge Maryland Environmental Surcharge Energy Conservation Surcharge Deferred Fuel Credit Clean Air Act Recovery Surcharge Temporary Mitigation Surcharge Societal Benefits Charge Energy Conservation Surcharge Credit Retail Customer and Third-Party Retail Fees and Services Customer Choice Credit Administrative Credit Energy Cost Adjustment Surcharge Residential Service - General... R...6 General and Commercial Service...(Restricted)... C...7 General Service... G...8 Issued May 21, 2009 Effective June 17, 2009