Exhibit ABC - 3 ­Sample Commercial project

NPV test calculation

Exhibit ABC - 3- Sample Commercial NPV Calculation Page 1 of 5

Assumptions Reflects the first 20 years of the analysis for illustrative purposes

Project Asslfflptions Evaluation Period (Year) 25 Year One 2014 Capital In Service Date 2014

Cost • Commerc,al Main I Line Cost $ 719,000 CIAC $ 77,433

Gas Data • Commercial Variable Distribution Charge (VDC) ($/Mel for 1st 200 Mel) $ 3 64

Vanable Distribution Charge (VDC) ($/Mel for addt'I Mel) $ 2 .50 Annual Usage for 1st 200 Mc1 • Furn & HW (Mel) 2,400 Average Annual Usage for Addt'I Use • Furn & HW (Mel) 23,231 Customer Charge ($/Mo) $ 10 00

Financial Assllllptions Tax Life of Assels (Year) 20 Book Life of Assets (Year) 60 MACRS Schedule Current = 0 , Bonus • 1 0 Debt Ratio 435% Cost of Debt 471 % Equity Rallo 56.48% Cost of Equity 1000% After-tax WACC 6.85% Effective Tax Rate 4149% Federal Tax Rate 3500% Return on CIAC • Pre-tax Cost of Capital 11 .70%

2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

~ gQ1l 2018 2019 ~ ~ ~ ~ ~ ~ ~ gQgZ ~ ~ ~ ~ ~ ~ ~ Inflation Rate 25%, 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% Compollld lnflator 1 000 1.025 1 051 1.0TT 1,104 1.131 1 160 1.189 1.218 1.249 1 280 1.31 2 1.345 1.379 1.413 1.448 1.485 1.522 1.560 1.599

Annual Unit

Proiect NPV $ (14,450) NPV of CIAC Tax Benefits $ 14,450 Adjusted NPV $ (0)

Exhib'1 ABC - 3 - Sample Commercial NPV Calculation Page 2 of 5

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

~ ~ ~ ~ 2lli. ~ Z,!!21 ~ ~ ~ ~ ~ gw_ ~ ~ l1Q;lQ ~ ~ ~ ~ Commercial Annual Units 1 Annual Usage 25,631 Cumulative Usage 25,631 25,631 25,631 25,631 25,631 25,631 25,631 25,631 25,631 25,631 25,631 25,631 25,631 25,631 25,631 25,631 25,631 25,631 25,631 25,631 Annual Distribution Revenue Is 66,733 I$66,733 $66,733 $66,733 $66,733 $66,733 $66,733 $66,733 $66,733 $66,733 $66,733 $66,733 $66,733 $66,733 $66,733 $66,733 $66,733 $66,733 $66,733 $66,733 CIAC excluding Tax Benefits $ TT,433 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Customer Charge $ 120 $ 120 $ 120 $ 120 $ 120 $ 120 $ 120 $ 120 $ 120 $ 120 $ 120 $ 120 $ 120 $ 120 $ 120 $ 120 $ 120 $ 120 s 120 $ 120 Total Gas Revenue $ 144,286 $66,853 $66,853 $66,853 $66,853 $66,853 $66,853 $66,853 $66,853 $66,853 $66,853 $66,853 $66,853 $66,853 $66,853 $66,853 $66,853 $66,853 $66,853 $66,853 Capital Costs $ 719,000 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

ECONOMIC EVALUATION TEMPLATE Exhibit ABC • 3 • Sample Commercial NPV Calculation Page 3 of 5

Project Description: Commercial NPV Calculation

Company: PECO Energy

Analyst:

Economic Results: Evaluation Years = 25

PECONPV cs1 • . -1<01

Project EvaluaCion Lile Years .'.?.<

DISCOUNTED CASH FLOW ANALYSIS: Year l

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Revenues: l2l!l ~ ~ 20.lZ 2211 ~ m!l mi am ~ aw ~ l!m 222! mi ml! ~ ml ~ ~ m!

Revenues • Electnc 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Revenues · Gas & CIAC 1,715,328 72,143 105,569 66,853 66,853 66,853 66,853 66853 66,853 66,853 66,853 66,853 66,853 66,853 66,853 66,853 66,853 66,853 66,853 66,853 66,853

Interest Income 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Total Revenues 1,715.328 72,143 105,569 66,853 66,853 66,853 66,853 66,853 66,853 66,853 66,853 66,853 66,853 66,853 66,853 66.853 66,853 66853 66,853 66.853 66,853

PECO Rewnues 1,715,328 72,143 105,569 66,853 66,853 66,853 66,853 66,853 66,853 66,853 66,853 66,853 66,853 66,853 66,853 66,853 66,853 66,853 66,853 66,853 66,853

Expenses: Interest. Marketing and Loan Fees 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Savings (Avoided O&M) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Customer Rebate 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Tola! Operabng Costs 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 PECO Operating Costs 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Total Operating Cash Flow 1,715,328 72,143 105,569 66,853 66,853 66,853 66.853 66,853 66,853 66,853 66.853 66.853 66,853 66,853 66853 66.853 66,853 66,853 66,853 66,853 66.853 PECO Open,ling Cash Flow 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Capital: lmllal Cost (Capotal) 727,988 359,500 368,488 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Savings (Avoided Capital) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Ongov,g Capilal (Item 2) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Total Capital Spending 727,988 359,500 368,488 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 PECO Capital Spending 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Taxes: Current Income Tax 409,682 24,341 27,302 6,742 8,316 9,TT3 11 ,121 12,368 13520 14,170 14,263 14,263 14.263 14,263 14,263 14,263 14.263 14 ,263 14,263 14,263 14,263

Gross Re<:eipts Tax (Electric Rev only) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Capital Stock Tax 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

PURTA Tax 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Total Current Taxes 409,682 24,341 27,302 6,742 8,316 9,773 11 ,121 12.368 13,520 14,170 14,263 14,263 14,263 14.263 14,263 14,263 14,263 14,263 14.263 14,263 14.263

PECO Taxes 409.682 24,341 27,302 6,742 8,316 9,773 11,121 12,368 13,520 14,170 14,263 14,263 14,263 14,263 14,263 14,263 14,263 14,263 14,263 14,263 14,263

Initial Loan Pnncipal Payment

Total Prote<:t Net Cash Flow PECO Net Cash Flow

0 0

577,658 577,658

0 0

(311 ,698) (311,698)

0 0

(290,220) (290,220)

0 0

60,11 1 60,111

0 0

58,536 58,536

0 0

57,080 57,080

0 0

55,732 55,732

0 0

54,485 54,485

0 0

53,332 53,332

0 0

52,683 52,683

0 0

52,590 52,590

0 0

52,590 52,590

0 0

52,590 52,590

0 0

52,590 52,590

0 0

52,590 52,590

0 0

52,590 52,590

0 0

52,590 52,590

0 0

52.590 52,590

0 0

52.590 52,590

0 0

52 590 52,590

0 0

52,590 52,590

Evaluation Years = 25

PECONPVI ($14,450)1

Exh;bit ABC - 3 - SalT'!)le Corrmercial NPV Calculation Page 4 of 5

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

22ll ru§ ~ ~ &ill ml! am ~ ~ ~ ~ ~ mi m§ ~ ~ ~ ma ~ ~ Revenue less CIAC $ 33,426 $ 66,853 $ 66,853 $ 66,853 $ 66,853 $ 66,853 $ 66,853 $ 66,853 $ 66,853 $ 66,853 $ 66,853 $ 66,853 $ 66,853 $ 66,853 $ 66,853 $ 66,853 $ 66,853 $ 66,853 S 66,853 S 66,853 Book Depreciation $ 2,673 $ 8,169 $ 8,169 $ 8,169 $ 8,169 $ 8,169 $ 8,169 $ 8,169 $ 8,169 $ 8,169 $ 8,169 $ 8,169 $ 8,169 $ 8,169 $ 8,169 s 8,169 $ 8,169 $ 8,169 s 8,169 s 8,169

Ratebase

Gross Plant $320,784 $650,555 $650,555 $650,555 $650,555 $650,555 $650,555 $650,555 $650,555 $650,555 $650,555 $650,555 $650,555 $650,555 $650,555 $650,555 $650,555 $650,555 $650,555 $650,555 Less: Ace Depn $ 2,673 $ 10,843 $ 19,012 $ 27,181 $ 35,351 $ 43,520 $ 51,689 $ 59,859 $ 68,028 $ 76,198 $ 84,367 $ 92,536 $100,706 $108,875 $117,045 S 125,214 $133,383 $141 ,553 $149,722 $157,891

ADIT $ (12,282) $ (t7,286) $ (2,434) $ 11,090 $ 23,386 $ 34,545 $ 44,652 $ 53,786 $ 62,373 $ 70,882 $ 79,390 $ 87,899 $ 96,407 $104,9t6 $113,424 $121,932 $130,441 $138,949 S 147,458 $155,966

Rate Base $330,392 $656,998 $633,9n $612,283 $591,818 $572,490 $554,213 $536,909 $520,153 $503,475 $486,797 $470,119 $453,442 $436,764 $420,086 S403,408 $386,730 $370,053 $353,375 $336,697

Income Tax Calculation Revenue $ 72,143 $105,569 $ 66,853 $ 66,853 $ 66,853 $ 66,853 $ 66,853 $ 66,853 $ 66,853 $ 66,853 $ 66,853 $ 66,853 $ 66,853 $ 66,853 $ 66,853 $ 66,853 $ 66,853 s 66,853 S 66,853 s 66,853 Expense $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ s s Interest $ 6,772 $ 13,467 $ 12,995 $ 12,551 $ 12,131 $ 11 ,735 $ 11 ,360 $ 11 ,006 $ 10,662 $ 10,320 $ 9,978 $ 9,636 $ 9,295 $ 8,953 $ 8,611 $ 8,269 $ 7,927 $ 7,585 s 7,243 $ 6,902 Tax Depreciation $ 13,481 $ 39,771 $ 50,605 $ 46,810 $ 43,300 $ 40,051 $ 37,047 $ 34,268 $ 32,704 $ 32,479 $ 32,479 $ 32,479 $ 32,479 $ 32,479 $ 32,479 $ 32,479 $ 32,479 $ 32,479 S 32,479 s 32,479

Taxable Income $ 51,889 $ 52,332 $ 3,253 $ 7,492 $ 11,422 $ 15,067 $ 18,446 $ 21,579 $ 23,487 $ 24,053 $ 24,395 $ 24,737 $ 25,079 $ 25,421 $ 25,763 $ 26,105 $ 26,447 $ 26,788 S 27,130 $ 27,472 Taxes@41 494% $ 21 ,531 $ 21 ,714 $ 1,350 $ 3,109 $ 4,739 $ 6,252 $ 7,654 $ 8,954 $ 9,746 $ 9,981 $ 10,123 $ 10,264 $ 10,406 $ 10,548 $ 10,690 $ 10,832 $ 10,974 $ 11,115 S 11 ,257 $ 11 ,399 Deferred taxes @35% $ 3,783 $ 11,060 $ 14,852 $ 13,524 $ 12,296 $ 11,159 $ 10,107 $ 9,135 $ 8,587 $ 8,508 $ 8,508 $ 8,508 $ 8,508 $ 8,508 $ 8,508 $ 8,508 $ 8,508 $ 8,508 $ 8,508 $ 8,508 Deferred Taxes CIAC $ 16,065 $ 16,065 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ s s $

Exhibit ABC - 3 - Sample Commercial NPV Calculation Page Sof 5

CIAC • Deferred Tax Benefits Calculation

Accumulated Deferred Tax $32 ,130 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 3.75% 7.22% 6.68% 6.18% 5.71% 5.29% 4.89% 4 .52% 4.46% 4.46% 4.46% 4.46% 4.46% 4.46% 4.46% 4.46% 4.46% 4.46% 4.46% 4.46%

Tax Depreciation - 20-Yr MACRS $32,130 $ 1,205 $ 2,319 $ 2,145 $ 1,985 $ 1,836 $ 1,698 $ 1,570 $ 1,453 $ 1,434 $ 1.433 $ 1,434 $ 1,433 $ 1,434 $ 1,433 $1,434 $1 ,433 $ 1,434 S 1,433 $ 1,434 S 1,433

gm~ ll212 l1l!!Z 2.Qli! &lli ~ ~ ~ ~ ~ ~ 2W &W ~ ~ gl!aQ ~ &lm. Wi Beginning Balance $ 32,130 $ 30,925 $ 28,605 $26,460 $24,475 $22,640 $20,942 $19,371 $17,918 $16,485 $15,051 $13,618 $12,185 $10,751 $9,318 $7,884 $6,451 $5,017 $3,584 $2,150 Revenue $ 3,760 $ 3,619 $ 3,348 $ 3,097 $ 2,864 $ 2,650 $ 2,451 $ 2,267 $ 2,097 $ 1,929 $ 1,762 $ 1,594 $ 1,426 $ 1,258 $1 ,090 $ 923 $ 755 $ 587 $ 419 $ 252 Income $ 2,200 $ 2,117 $ 1,959 $ 1,812 $ 1,676 $ 1,550 $ 1,434 $ 1,326 $ 1,227 $ 1,129 $ 1,031 $ 932 $ 834 $ 736 $ 638 $ 540 $ 442 $ 344 $ 245 $ 147 NPV of CIAC Tax Benefits $14,450