NEU Electric and Natural Gas Price Update

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1 Exelon s $24 Billion Energy Bill Senate Bill 2814 Short-Term Energy Price Outlook On November 15, 2016, Exelon, through its legislative supporters, introduced Senate Bill 2814, a massive 446 page document that has the potential to cost Illinois consumers $24 Billion. Some of the bill components, but not all, are aimed at: Keeping two of Exelon s nuclear plants open. The Clinton plant is located in Ameren s service area and the Quad Cities is plant located in ComEd s service area. Provision to keep downstate coal plants running. Energy efficiency provision that will allow ComEd to earn a return on its energy efficiency program. ComEd is currently spending approximately $155 Million per year under its program and all costs are a pass-through to customers. Implementing demand charge rates for residential customers. Implementing changes to the Renewable Portfolio Standards to increase wind and solar construction in Illinois. Increasing capacity costs for Dynegy s downstate generating plants located in MISO (Midcontinent Independent System Operator). ComEd/Exelon is located in PJM and capacity prices are higher. The bill was introduced in the short veto session this week consisting of six days. The final three days are during the week after Thanksgiving. While this bill is highly controversial, it could be voted on before December 1. We will provide a detailed overview of this bill at the December 7 NEU meeting. Page 1 In its November 8, 2016 Short-Term Energy Outlook, the EIA reported that the price difference between the November and January NYMEX futures contracts was the largest since October This price difference exceeded.65 per MMBtu at one point. EIA cited warmerthan-normal temperatures during late October and a change in the delivery month as one reason for this large price discrepancy. The average price for the December through March period in late October was in the $3.50 per MMBtu range. During the first two weeks of November this average price decreased to the $2.90 per MMBtu range. The EIA has estimated that the Henry Hub natural gas spot price will average $2.50 per MMBtu in 2016 and $3.12 per MMBtu in Natural gas fueled electric generation in 2016 has so far accounted for 34% of total U.S. generation. In 2017 the EIA expects natural gas fueled generation to account for 33% of total generation. Expected higher natural gas prices in 2017 is the reason for this decrease. On November 4, 2016, natural gas storage inventories were 4,047 Bcf, 51 Bcf higher than last year at this time. The EIA was predicting an end of October volume over 4,000 Bcf, which would be a record. Storage levels on November 11, 2016 were 216 Bcf above the fiveyear average and are also above the five-year historical range. Diesel prices, the standby fuel for natural gas, settled at $1.46 per gallon, down.14 from the reported October price of $1.60 per gallon. The natural gas and oil rig count increased by 46 during the last month to 568. While 26% lower that last year at time, the number count has been increasing over the last six months.

2 $ / MWH Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Electric: Short-Term Outlook The NYMEX Northern Illinois Hub 12-month forward price at the end of October for the November 2016 to October 2017 period was $28.95 per MWH (2.895 per kwh). Twelve-month forward peak and off-peak prices were $35.39 and $23.68 per MWH, respectively. PJM ComEd Zone Day-Ahead hourly index prices in October averaged $29.82 per MWH and Real-Time prices averaged $28.52 per MWH. Day- Ahead peak period prices in October averaged $36.61 per MWH and offpeak prices averaged $24.23 per MWH. Real-Time peak prices averaged $34.73 per MWH and off-peak prices averaged $23.41 per MWH in September. NYMEX Northern Illinois Hub Electric Prices 12-Month Forward Prices Through November 1, 2016 $60 $50 $40 $30 November 1, 2016 $ / MWH Peak $35.39 Off-Peak $23.68 Average $28.95 ` PJM Day-Ahead and Real-Time Prices ComEd BES-H Mo. Avg Peak Off-Peak Mo. Avg Peak Off-Peak Mo.Avg Oct-15 $25.43 $31.15 $20.29 $25.00 $30.52 $20.05 $26.84 Nov-15 $25.52 $30.12 $21.51 $25.39 $30.15 $21.23 $27.39 Dec-15 $22.87 $26.79 $19.03 $23.64 $28.47 $18.93 $25.44 $24.63 $29.51 $20.95 $23.91 $29.62 $19.60 $25.66 Feb-16 $23.31 $26.82 $20.03 $22.60 $27.26 $18.24 $24.20 Mar-16 $22.96 $26.55 $19.44 $21.88 $25.48 $18.36 $23.44 Apr-16 $24.08 $29.27 $19.55 $24.56 $30.84 $19.06 $26.30 $22.27 $27.53 $17.95 $22.10 $27.44 $17.71 $23.67 Jun-16 $25.14 $30.05 $20.45 $26.54 $31.35 $21.93 $28.42 Jul-16 $30.86 $40.04 $23.31 $28.49 $34.81 $23.29 $30.51 Aug-16 $30.09 $37.19 $23.15 $31.56 $40.66 $22.65 $33.80 $29.29 $36.65 $22.26 $29.55 $35.45 $23.90 $31.64 Oct-16 $29.82 $36.61 $24.23 $28.52 $34.73 $23.41 $30.55 Cal '15 $28.01 $33.95 $22.69 $28.21 $34.11 $22.91 $30.75 Cal '16 $26.27 $32.04 $21.15 $25.99 $31.82 $20.82 $27.83 NERC Hours (6 AM TO 10 PM) Day-Ahead LMP ComEd Zonal Price - $/ MWH Real-Time LMP PJM balancing operating reserve ( BOR ) costs in October averaged.06 per MWH for Day-Ahead energy and.41 per MWH for Real- Time energy. Suppliers generally include the Day-Ahead BOR cost in their ancillary service charge but will separately add the Real-Time BOR cost to Real-Time energy purchases. $20 $10 Peak Off-Peak Round-the-Clock Page 2 PJM Operating Reserve Costs ComEd Zone ($ per MWH) (a) (b) (c = b-c) (d) (e) (f = e-d) (g = c+f) Balancing Operating Reserve Costs PJM Index Prices - ComEd Zone Net Increase Average BORs Day-Ahead Real-Time RT less DA DA RT RT less DA in RT Costs to Dec $ $28.11 $ $1.14 to Oct $26.24 $ $22.27 $ Jun $25.14 $26.54 $1.40 $1.65 Jul $30.86 $ $2.37 -$1.98 Aug $30.09 $31.56 $1.47 $ $29.29 $ Oct $29.82 $ $

3 $ per MWH Feb-15 Mar-15 Apr-15 Jun-15 Jul-15 Aug-15 Oct-15 Nov-15 Dec-15 Feb-16 Mar-16 Apr-16 Jun-16 Jul-16 Aug-16 Oct-16 $ per MMBtu Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 PJM Day-Ahead Prices for ComEd Zone Daily Average Hourly Prices Through October 31, 2016 Natural Gas: Short-Term Outlook $200 $180 The closing 12-month forward Henry Hub NYMEX price for the November 2016 to October 2017 period was $3.100 per MMBtu. The forward 12-month Chicago price for this same delivery period was $3.130 per MMBtu including a Chicago basis of.03 per MMBtu. $160 $140 $120 $100 $80 $60 $40 $20 The November 2016 NYMEX Henry Hub futures contract settled at $2.764 per MMBtu, down.188 per MMBtu from the October settlement price of $2.952 per MMBtu. The November NYMEX Chicago Inside FERC price settled at $2.810 per MMBtu. NYMEX futures prices, local distribution company gas costs, storage volumes and rig counts are summarized in the following graphs and tables. $16 $14 $12 $10 $8 NYMEX Natural Gas 12-Month Forward Price Trend October 31, 2016 November - Last Day Settlement 12-Month NYMEX Forw ard $3.100 Chicago Basis Month "Chicago" Total $3.130 Daily Average Month Average $6 $4 $2 Page 3 Prompt Month 12-Month Forward

4 Settlement Prices ($/MMBtu) Nov-16 Mar-17 Jul-17 Nov-17 Mar-18 Jul-18 Nov-18 Mar-19 Jul-19 Nov-19 Mar-20 Jul-20 Nov-20 Mar-21 Jul-21 Nov-21 $ per MMBtu Jan-14 Mar-14 May-14 Jul-14 Nov-14 Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 NYMEX Natural Gas Settlement Price Comparison $4.0 Oct-16 settlement prices $3.5 $12 $10 $8 Chicago Basis NYMEX Chicago vs. NYMEX Henry Hub Prices Actual settlement prices through November Forward prices for remaining months. $3.0 $2.5 $6 $4 Forward Prices $2.0 $1.5 Nov-16 settlement prices Closing Settlement Price November 1, 2016 NYMEX Close $2.764 Chicago Basis.046 Chicago Price $2.810 $2 -$2 $1.0 NYMEX Chicago - Platts Inside FERC Basis (Chicago less NYMEX) The following chart compares the monthly price of the NYMEX Henry Hub futures contract to the NYMEX Chicago price. NYMEX offers a futures contract that is settled at the Platt s Inside FERC monthly index price for Chicago. As shown in the following Chicago Basis chart, the forward Henry Hub and Chicago prices are relatively close. The 12- month forward average basis (Chicago price less Henry Hub price) was.030 per MMBtu at close of the November NYMEX contract. The actual basis price a supplier offers may differ from the NYMEX calculated price because there is not a significant amount of price transparency in basis offers. Page 4 Utility Natural Gas Supply Costs November 2016 ($/Therm) Gas Supply Costs: Peoples Gas North Shore NICOR Bundled Gas Supply Cost Commodity Gas Charge Non-Commodity Charge Standby Demand Charge Storage Gas Charge Environmental Surcharges Rider 11, Peoples and North Shore Rider 12, NICOR - Small C&I.0003 Rider 12, NICOR - Large C&I.0011 Rider VBA - Balancing Adjustment (.0087) (.0097) Hub Service Credit - Sales.0000 Hub Service Credit - Transportation.0000 NICOR Transportation Service Adj. (.0002) NICOR, Rider 5 Storage Adj. Factor (.0001) Qualifying Infrastructure Surcharge 6.99% 0.00% 9.30%

5 Billion Cubic Feet (Bcf) Jan-12 Mar-12 May-12 Aug-12 Oct-12 Dec-12 Mar-13 May-13 Jul-13 Sep-13 Dec-13 Feb-14 Apr-14 Jul-14 Nov-14 Apr-15 Jun-15 Aug-15 Nov-15 Mar-16 Jun-16 Aug-16 Oct-16 Natural Gas Price Summary Comparison November 2016 ($ per MMBtu) EIA Weekly Storage Report January 2012 through November 2016 Burner-Tip $/MMBtu NYMEX Final Settlement Price $2.764 NYMEX Chicago Basis.046 Chicago City-gate Price (b) $2.810 Local Distribution $ (a) Peoples Gas Burner-Tip Price Rate 2 - Utility Supply Service, 3,500 MMBtu $5.982 $3.172 Rate 4 - Utility Supply Service, 15,000 MMBtu $6.026 $3.216 Rate 4 - Utility Supply Service, 60,000 MMBtu $5.890 $3.080 Rate 2, SST, 29 Days Storage, 3,500 MMBtu $5.487 $2.677 Rate 4, LST, 29 Days Storage, 15,000 MMBtu $5.310 $2.500 Rate 4, LST, 29 Days Storage, 60,000 MMBtu $5.149 $ ,000 3,500 3,000 2,500 2,000 1,500 North Shore Burner-Tip Price Rate 2 - Utility Supply Service, 3,500 MMBtu $5.206 $2.396 Rate 3 - Utility Supply Service, 60,000 MMBtu $5.117 $2.307 Rate 2, SST, 24 Days Storage, 3,500 MMBtu $3.844 $1.034 Rate 3, LST, 24 Days Storage, 60,000 MMBtu $ NICor Burner-Tip Price Rate 6 - Utility Supply Service, 15,000 MMBtu $4.450 $1.640 Rate 7 - Utility Supply Service, 60,000 MMBtu $4.506 $1.696 Rate 76, 0% Standby, 15,000 MMBtu (c) $ Rate 77, 0% Standby, 60,000 MMBtu (c) $ (a) Local distribution charge = burner-tip less city-gate price. Includes all taxes, city fees and gas loss costs. (b) NYMEX last day settlement price plus NYMEX Chicago basis sw ap last day settlement price. (c) Assumes 31 days storage in place of standby service. Page 5 1, Current Five-Year Average Last Year Natural Gas Storage Summary on November 11, /11/2016 Difference BCF BCF % Change Current Total 4,047 Last Year 3, % 5-Year Average 3, %

6 # of Rigs 07-Jan Sep Apr Dec Aug Apr Dec Jul Mar Nov Jul Mar Nov Jun Jan Apr Dec Aug-16 2,500 2,000 1,500 1, Natural Gas Rig Count January 2005 Through November 2016 Nat Gas November 11, 2016 Rig Count on 11/11/16 11/13/15 % Change Gas % Oil % Misc. 1 - Total % Oil ComEd 2016 Formula Rate Update ICC Docket No On October 21, 2016, Administrative Law Judges ( ALJs ) from the Illinois Commerce Commission ( ICC ) issued their Proposed Order in ComEd s 2016 Formula Rate Update ( FRU ) proceeding recommending a $127.4 Million rate increase (5.06%). ComEd filed its 2016 FRU on April 13, 2016 proposing a $132.3 Million increase (5.26%), after all adjustments. The Final Order can modify the ALJ s proposed rate increase amount. New rates will become effective on January 1, ComEd s initial filing was suspended by the ICC. The hearing schedule for a Final Order has a case deadline of December 9, The FRU will only adjust rate levels. ComEd is expected to file a Rate Design Update by the end of December. This filing will reallocate costs among rate classes. ComEd Rate Increase Summary Annual Revenue ($ Millions) ComEd Approved Proposed Proposed ComEd Proposed 1/1/2016 1/1/2017 Order Annual Revenue Requirement $2,440.0 $2,575.9 $2,573.5 Reconciliation Adjustment $92.0 $71.8 $69.2 Net Revenue Requirement $2,532.0 $2,647.7 $2,642.7 ComEd Reporting in Filing $2,515.3 $2,647.7 $2,642.7 Change / Increase for 2016 Rates $132.3 $127.4 * Includes $7 Million ROE collar adjustment for January 2017 Rates Page 6 NEU Energy Price Update is prepared by: Brad Fults and Charles Drake, NEU Staff Support, bfults@progressiveenergyllc.com; Phone: Contact either Brad Fults or Charles Drake if you have questions about information in this bulletin or if you would like information about the NEU. Charles Drake can be reached at (630)