ESMEC-ET Electric Supply Portfolio Report

November 12, 2015

2

Highlights

• FY16 YTD unit cost 14.9% below budget. FY16 full year forecast reduced from $76.00 to $70.00.

• Billing rate lowered to $.065 KWh effective with Nov 2015 billing month (covering Oct 2015 MRD to Nov 2015 MRD). The lowered rate can be held thru the balance of FY16 and if hourly rates remain at current low levels there may be an opportunity to either lower the FY16 billing rate further or lower the initial FY17 billing rate. Average working capital balance (WCB) for October 2015 was $2.2 million, a $139 thousand increase from September. The lower billing rates should begin reducing the WCB in starting in December.

• Record low block purchased in October for FY19 at $36.60 for ATC (around the clock) at DPL Zone.

• Given historical lows in forward electric market prices, recommendation is to buy now the final block purchase covering FY17 (4 MW On Peak).

3

Contents

I. Supply Portfolio Results Page #

A. Key Performance Measures 5

B. Electric Supply Cost Chart and Summary – FY16 6-7

II. Portfolio Hedge Strategy Review

A. Hedge Position Chart 9

B. Open Blocks Purchased and Scheduled Purchases 10

C. Proforma Hedge Position Chart 11

D. Forward Market Price Reports 12-13

E. Hourly Market Price Reports 14-15

III. Portfolio Billing Rates

A. Portfolio Cost and Billing Rate History 17

B. Electric Supply Portfolio vs. DPL SOS Rate Summary 18

C. Working Capital – Billing Rate Comparison 19

D. FY16 Billing Rates by Rate Schedule (Budget) 20

Appendix 22-28

4

I. Supply Portfolio Results

5

ESMEC-ET Electric Supply Portfolio

Key Portfolio Measures

November 2015

1. Total Supply Cost ($/MWh)

Actual O/(U) Budget % O/(U) Budget Actual O/(U) Budget % O/(U) Budget

Unit Cost, $/MWh $70.12 ($6.60) -8.6% $65.35 ($11.43) -14.9%

Cost @ Volume ** $891,043 ($83,857) -8.6% $3,661,638 ($640,159) -14.9%

* PJM reported MWh's equal metered MWh's grossed up for utility line losses and unaccounted for energy

** Represents unit cost variance to budget, does not reflect volumetric variance to budget

2. Replacement Value - Blocks - Current Market O/(U) Hedge Costs ($MM)

FY 2016 ($0.42)

FY 2017 (0.35)

FY 2018 (0.30)

FY 2019 (0.34)

Total ($1.41)

3. Hedge Summary

Peak Off Total Peak Off Total

FY 2016 80% 75% 78% 87% 67% 79%

FY 2017 60% 56% 58% 69% 69% 69%

FY 2018 20% 19% 19% 49% 36% 43%

FY 2019 0% 0% 0% 24% 36% 29%

4. Actual/ Forecasted Supply Cost ($ MWh)

Total

Supply Cost $/MWh %

FY 2015 $68.04 ($29.44) -30.2%

FY 2016 $70.00 $1.96 2.9%

FY 2017 $70.35 $0.35 0.5%

All unit costs based on PJM Reported MWh's *

YR to YR Incr/(Decr)

FY 2016 - Oct YTD

Minimum Guideline Actual

FY 2016 - Oct

6

$60

$65

$70

$75

$80

$85

$90

$60

$65

$70

$75

$80

$85

$90

$/MWh

ESMEC-ET Electric Supply Portfolio Cost - FY 2016

Monthly Actual Prior Year YTD Actual Portfolio Budget Billed Rate

All Unit costs based on PJM volumes except billed rate

7

Total Supply Cost, Cumulative FY 2016ESMEC-ETUpdated: 11/11/2015

Actual Actual Actual Actual

Jul-15 Aug-15 Sep-15 Oct-15 Cumulative

PJM Load Charges - WGL/ESMEC-ETActual PJM Volume, MWh 15,117 14,135 14,069 12,707 56,027

Energy - DA & RT $115,362 $84,953 $124,137 $36,462 $360,915

Ancillary Charges 34,726 19,433 18,748 23,346 96,252

Transmission 69,886 71,052 68,922 71,028 280,889

Capacity 172,556 174,913 169,942 175,093 692,504

ARR/FTR & Marginal Loss (29,172) (27,633) (24,329) (23,760) (104,894)

Reconciliation 8,105 18,538 (49,641) 17,234 (5,763)

PJM Electric Cost 371,462 341,257 307,779 299,403 1,319,902

Fixed Rate Block Cost 537,374 521,166 509,844 529,270 2,097,654

Other ChargesWGL Service Fee 17,384 16,255 16,179 14,613 64,432

WGL Cost to Carry 0 0 0 0 0

WGL Cost of Collateral 3,759 4,747 6,432 8,842 23,780

Renew able (RPS Requirement) 37,000 37,000 37,000 37,000 148,000

Other Fees (MD PSC) 2,083 1,983 1,890 1,915 7,870

Subtotal 60,226 59,984 61,501 62,370 244,082

Total Supply Cost $969,062 $922,408 $879,125 $891,043 $3,661,638

Unit Costs, $/MWh

Energy $43.18 $42.88 $45.06 $44.52 $43.88

Transmission $4.62 $5.03 $4.90 $5.59 $5.01

Capacity 11.41 12.37 12.08 13.78 12.36

Ancillary, PJM Other Charges & Credits 0.90 0.73 (3.93) 1.32 (0.26)

Renew able (RPS Requirement) 2.45 2.62 2.63 2.91 2.64

Other 1.54 1.63 1.74 2.00 1.71

Total Supply Cost $64.11 $65.26 $62.49 $70.12 $65.35

Expected Unit Price $79.65 $75.18 $75.36 $76.72 $76.78

Budget Variance ($15.54) ($9.92) ($12.87) ($6.60) ($11.43)

Hedge Settlement $175,997 $197,679 $135,778 $215,542 $724,996

Unit Cost, $/MWh $4.17 $4.68 $3.21 $5.10 $12.94

8

II. Portfolio Hedge Strategy Review

9

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

MWhESMEC-ET - Current Electric Hedge Status, 11/11/2015

Total Load Max Hedge Purchased Min Hedge

Based on FY2015 Gross Annual MWhs Adjusted for Planned Solar Projects

Peak Off Total

FY 2016 87% 67% 79%

FY 2017 69% 69% 69%

FY 2018 49% 36% 43%

FY 2019 24% 36% 29%

Actual Hedge %'s

10

ESMEC-ET 11/11/15

Open Blocks Purchased and Scheduled Purchases

FY 2016 - FY 2018

Block #Quantity

(MW)Type Index

Period

Start

Period

End

Purchase or

Target

Purchase

Date

Total

Contract

Quantity

(MWh)

Block Price

($/MWh) - PJM

West Hub

Block Price

($/MWh) - Basis:

PJM West Hub to

DPL Zone

Block Price

($/MWh) -

Delivered to

DPL Zone

Total Contract

Cost

14 5 ATC DA Jul-15 Jun-16 4/10/13 43,920 $45.55 2,000,556$

16 5 Peak DA Jul-14 Jun-16 11/5/13 40,960 $46.80 1,916,928$

17 5 ATC DA Jul-16 Jun-17 11/20/13 43,800 $40.25 1,762,950$

18 5 ATC DA Jul-15 Jun-16 4/29/14 43,920 $48.80 2,143,296$

19 5 Peak DA Jul-15 Jun-17 8/27/14 40,960 $54.50 2,232,320$

20 5 ATC DA Jul-17 Jun-18 5/5/15 43,800 $43.20 1,892,160$

21 5 ATC DA Jul-16 Jun-17 6/9/15 43,800 $42.60 1,865,880$

22 5 Peak DA Jul-17 Jun-18 7/10/15 20,320 $48.85 992,632$

23 5 ATC DA Jul-18 Jun-19 10/9/15 43,800 $36.30 1,589,940$

24 4 Peak DA Jul-16 Jun-17 12/15/15 16,320 $41.65 $5.50 $47.15 769,447$

Total Open Blocks Purchased 365,280 $44.89 16,396,662$

Total Scheduled Purchases (excludes declined blocks) 16,320 $47.15 769,447$

Total Open Blocks Purchased & Scheduled Purchases 381,600 $44.98 17,166,109$

West Hub NYMEX Close Prices as of 11/10/15, Basis Prices Estimated

11

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

MWh

ESMEC-ET Proforma Electric Hedge Status, 12/31/2015

Total Load Max Hedge Purchased Scheduled Min Hedge

Based on FY 2015 Gross Annual MWhs Adjusted for Planned Solar Projects

Peak Off Total

FY 2016 87% 67% 79%

FY 2017 87% 69% 80%

FY 2018 49% 36% 43%

FY 2019 24% 36% 29%

Pro Forma Hedge %'s

12

13

14

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

$110

$120

$130

$140

ATC Average LMP-RT PJM Western Hub, 1998 - 10/2015

Avg-Monthly Avg-12 Mo

15

-$10

-$5

$0

$5

$10

$15

$20

$25

$30

ATC Average LMP-RT PJM DPL Zone Basis, 1999 - 10/31/2015

Avg Monthly Avg-12 Mo

16

III. Portfolio Billing Rates

17

ESMEC-ET Electric Supply Portfolio

Budget, Actual and Billing Rates

($ kWh)

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY2016

Portfolio budget rate $0.0912 $0.0900 $0.1000 $0.1000 $0.0950 $0.0840 $0.0870 $0.0830 $0.0720 $0.0760

Portfolio actual/forecast cost$0.0876 $0.0993 $0.0976 $0.0919 $0.0940 $0.0810 $0.0810 $0.0975 $0.0680 $0.0700

Actual o/(u) budget ($0.0036) $0.0093 ($0.0024) ($0.0081) ($0.0010) ($0.0030) ($0.0060) $0.0145 ($0.0040) ($0.0060)

Approximate Weighted Average Billing Rates - Metered Basis(1):

Billing months:

Jul - Oct $0.0992 $0.0992 $0.1094 $0.1094 $0.0954 $0.0944 $0.0954 $0.0894 $0.1004 $0.0844

Nov - Feb $0.0844 $0.0844 $0.0944 $0.0944 $0.0804 $0.0794 $0.0794 $0.0774 $0.0854 $0.0650

Mar - Jun $0.0814 $0.0844 $0.0944 $0.0944 $0.0804 $0.0794 $0.0794 $0.0849 $0.0854 $0.0650

W/A billing rate $0.0885 $0.0894 $0.0995 $0.0995 $0.0855 $0.0845 $0.0849 $0.0839 $0.0906 $0.0712

Portfolio budget rate (metered volumes) $0.0760 $0.0800

(1) Includes primary (GSP), secondary (LGS, SGS) and outdoor lighting (OL/ORL) rate schedules

Preliminary and forecast rates in blue

PJM VolumesEstimated Metered Volumes

18

$0.070

$0.075

$0.080

$0.085

$0.090

$0.095

$0.100

$0.105

$0.110

$0.115

$0.120

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15

Portfolio Cost Weighted Average Billing Rate DPL Standard Offer Service Rate

ESMEC-ET

Electric Supply Rates ($/KWh)$/KWh$/

19

$0.050

$0.060

$0.070

$0.080

$0.090

$0.100

$0.110

$0.120

($1,500,000)

($1,000,000)

($500,000)

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000Jul-

12

Au

g-1

2

Se

p-1

2

Oct-

12

No

v-1

2

De

c-1

2

Jan

-13

Feb-1

3

Ma

r-1

3

Ap

r-13

Ma

y-1

3

Jun

-13

Jul-

13

Au

g-1

3

Se

p-1

3

Oct-

13

No

v-1

3

De

c-1

3

Jan

-14

Feb-1

4

Ma

r-1

4

Ap

r-14

Ma

y-1

4

Jun

-14

Jul-

14

Au

g-1

4

Se

p-1

4

Oct-

14

No

v-1

4

De

c-1

4

Jan

-15

Feb-1

5

Ma

r-1

5

Ap

r-15

Ma

y-1

5

Jun

-15

Jul-

15

Au

g-1

5

Se

p-1

5

Oct-

15

W/C Avg Balance Actual Cost ($/KWh) Billing Rate($/KWh)

ESMEC-ET Electric Supply PortfolioAverage Working Capital (W/C) Balances Held with Supplier

All unit costs based on PJM volumes except billed rate $/KWh

Jan '14 $.166 KWh

Average Excess Working Capital Balance Target = $1.5 million

20

ESMEC-ET Electric Supply Portfolio 11/11/15

Total Supply Cost Billing Rates by Rate Schedule ($ KWh)

Fiscal Year 2016

Billing Period Summer Winter Spring

Status Approved Approved Approved

Supplier Billing Months July 2015 - Nov 2015 - Mar 2016 -

Oct 2015 Feb 2016 Jun 2016

Meter Read Beginning: Jun 2015 Oct 2015 Feb 2016

Meter Read Ending: Oct 2015 Feb 2016 Jun 2016

FY 2016

W/A Billing

Delmarva Power Rate Schedule Rate

Secondary (SGS / SGS SH / LGS) $0.0850 $0.0655 $0.0655 $0.0718

Primary (GSP) $0.0825 $0.0630 $0.0630 $0.0694

Outdoor Lights (OL / ORL) $0.0700 $0.0505 $0.0505 $0.0574

Weighted Average Rate $0.0843 $0.0649 $0.0648 $0.0712

Estimated Portfolio Cost

Portfolio Budget Rate (Metered Volumes) $0.0800

21

Appendix

22

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

kW

ESMEC Portfolio Hourly Load

Hourly Load 30 Day Average

RLR, 7/14 - 6/15 (through 6/15)

23

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

kW

ESMEC Portfolio Hourly Load

Hourly Load 30 Day Average

RLR, 7/15 - 6/16 (through 8/15)

24

($1,600,000)

($1,400,000)

($1,200,000)

($1,000,000)

($800,000)

($600,000)

($400,000)

($200,000)

$0

$200,000

Monthly Cumulative

ESMEC Electric Mark to Market, 11/11/2015

25

ESMEC-ET Electric Supply Portfolio

Capacity and Transmission Tag Summary (MW)

Incr/(Decr) in Incr/(Decr) in

14/15 Year 15/16 Year

Cost ($) Cost ($)

13/14 14/15 15/16 MW % MW %

Unforced Capacity Obligation 31.3 29.9 34.1 (1.4) -4.5% 4.2 14.1% ($74,820) $256,519

Incr/(Decr) in Incr/(Decr) in

Cal Year Cal Year

2014 Cost ($) 2015 Cost ($)

2013 2014 2015 MW % MW %

Transmission Capacity 26.7 24.3 22.0 (2.4) -9.0% (2.3) -9.5% ($67,048) ($75,226)

(1) PJM Year June 1 - May 31

2015 o/(u) 20142014 o/(u) 2013Calendar Year

14/15 o/(u) 13/14PJM Year (1) 15/16 o/(u) 14/15

Impact of Inc/(decr) in UCAP MW

Impact of Inc/(decr) in Trans Cap MW

26

$15.00

$197.16

$150.53

$196.54 $187.37

$116.15

$171.24

$248.30

$145.38

$166.54 $158.68

$147.61

$215.97

$0

$50

$100

$150

$200

$250

$300

06/07 -Pre

RPM

07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19

$/MWDPJM - DPL Capacity Prices

Final Zonal Net Load Prices through 15/16, PJM years 16/17, 17/18 and 18/19 include Capacity Performance Prices

27

ESMEC-ET

Maryland Renewable Portfolio Requirements

Based on Chapters 583, 556 and 653 enacted May 22, 2012

Required %'s Based on Grandfathered %'s per SB791 Estimates in Blue

Report as of: 10/31/15

Required

%

Amount

Total REC

Quantity

Requirement

REC

Quantity

Purchased

to Date

%

Requirement

Purchased

to Date

Purchase

Cost

($/MWh)

($)

Purchased

Cost to Date

Actual or

Estimated

Annual Cost

$/MWh

Cost per

Portfolio

Usage

Required

% Amount

Total REC

Quantity

Requirement

REC

Quantity

Purchased

to Date

%

Requirement

Purchased to

Date

Purchase

Cost

($/MWh)

($)

Purchased

Cost to

Date

Actual or

Estimated

Annual Cost

$/MWh

Cost per

Portfolio

Usage

2012 173,040 6.40% 11,075 11,075 100% 4.15$ 45,959$ 45,959$ 0.27$ 0.1000% 173 173 100% 170.00$ 29,417$ 29,417$ 0.17$

2013 171,402 8.00% 13,712 13,712 100% 15.67$ 214,870$ 214,870$ 1.25$ 0.2000% 343 343 100% 170.00$ 58,277$ 58,277$ 0.34$

2014 165,359 10.00% 16,536 16,536 100% 16.12$ 266,545$ 266,545$ 1.61$ 0.3000% 496 496 100% 170.00$ 84,320$ 84,333$ 0.51$

2015 165,359 10.10% 16,701 13,965 84% 15.85$ 221,377$ 264,754$ 1.60$ 0.4000% 661 161 24% 170.00$ 27,370$ 112,444$ 0.68$

2016 165,359 12.20% 20,174 -$ -$ 0.5000% 827 -$

2017 165,359 12.55% 20,753 -$ -$ 0.5500% 909 -$

2018 165,359 14.90% 24,638 -$ -$ 0.9000% 1,488 -$

2019 165,359 16.20% 26,788 -$ -$ 1.2000% 1,984 -$

2020 165,359 16.50% 27,284 -$ -$ 1.5000% 2,480 -$

2021 165,359 16.85% 27,863 -$ -$ 1.8500% 3,059 -$

2022 165,359 18.00% 29,765 -$ -$ 2.0000% 3,307 -$

2023 165,359 18.00% 29,765 -$ -$ 2.0000% 3,307 -$

Required

%

Amount

Total REC

Quantity

Requirement

REC

Quantity

Purchased

to Date

%

Requirement

Purchased

to Date

Purchase

Cost

($/MWh)

($)

Purchased

Cost to Date

Actual or

Estimated

Annual Cost

$/MWh

Cost per

Portfolio

Usage

Total Actual

or Estimated

Annual Cost

($)

$/MWh

Cost per

Portfolio

Usage

2012 173,040 2.5% 4,326 4,326 100% 0.69$ 2,985$ 2,985$ 0.02$ 78,361$ 0.45$

2013 171,402 2.5% 4,285 4,285 100% 3.35$ 14,355$ 14,355$ 0.08$ 287,501$ 1.68$

2014 165,359 2.5% 4,134 4,134 100% 7.33$ 30,283$ 30,283$ 0.18$ 381,161$ 2.31$

2015 165,359 2.5% 4,134 3,458 84% 2.59$ 8,957$ 10,707$ 0.06$ 387,905$ 2.35$

2016 165,359 2.5% 4,134 -$ -$ -$

2017 165,359 2.5% 4,134 -$ -$ -$

2018 165,359 2.5% 4,134 -$ -$ -$

2019 165,359 0.0% -$ -$

2020 165,359 0.0% -$ -$

2021 165,359 0.0% -$ -$

2022 165,359 0.0% -$ -$

2023 165,359 0.0% -$ -$

Calendar

Year

Compliance

Portfolio

Usage

(MWh)

Tier I Solar - SREC

Calendar

Year

Compliance

Portfolio

Usage

(MWh)

Tier II All Tiers