<SEC-DOCUMENT>0001193125-18-072247.txt : 20180306
<SEC-HEADER>0001193125-18-072247.hdr.sgml : 20180306
<ACCEPTANCE-DATETIME>20180306170634
ACCESSION NUMBER:		0001193125-18-072247
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20180228
ITEM INFORMATION:		Regulation FD Disclosure
ITEM INFORMATION:		Other Events
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20180306
DATE AS OF CHANGE:		20180306

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			UNITIL CORP
		CENTRAL INDEX KEY:			0000755001
		STANDARD INDUSTRIAL CLASSIFICATION:	ELECTRIC & OTHER SERVICES COMBINED [4931]
		IRS NUMBER:				020381573
		STATE OF INCORPORATION:			NH
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-08858
		FILM NUMBER:		18670798

	BUSINESS ADDRESS:	
		STREET 1:		6 LIBERTY LANE WEST
		CITY:			HAMPTON
		STATE:			NH
		ZIP:			03842
		BUSINESS PHONE:		6037736504

	MAIL ADDRESS:	
		STREET 1:		6 LIBERTY LANE WEST
		CITY:			HAMPTON
		STATE:			NH
		ZIP:			03842
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>d547378d8k.htm
<DESCRIPTION>8-K
<TEXT>
<HTML><HEAD>
<TITLE>8-K</TITLE>
</HEAD>
 <BODY BGCOLOR="WHITE">

 <P STYLE="line-height:1.0pt;margin-top:0pt;margin-bottom:0pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P> <P STYLE="margin-top:4pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman" ALIGN="center"><B>UNITED STATES </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman" ALIGN="center"><B>SECURITIES AND EXCHANGE COMMISSION </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Washington, D.C. 20549 </B></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><center>
<P STYLE="line-height:6.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.00pt solid #000000;width:21%">&nbsp;</P></center> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman" ALIGN="center"><B>FORM <FONT
STYLE="white-space:nowrap">8-K</FONT> </B></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><center>
<P STYLE="line-height:6.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.00pt solid #000000;width:21%">&nbsp;</P></center> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>CURRENT
REPORT </B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Pursuant to Section&nbsp;13 or 15(d) </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>of the Securities Exchange Act of 1934 </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Date of Report (Date of earliest event reported): February&nbsp;28, 2018 </B></P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><center> <P STYLE="line-height:6.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.00pt solid #000000;width:21%">&nbsp;</P></center>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:24pt; font-family:Times New Roman" ALIGN="center"><B>UNITIL CORPORATION </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>(Exact name of registrant as specified in its charter) </B></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><center>
<P STYLE="line-height:6.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.00pt solid #000000;width:21%">&nbsp;</P></center> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:8pt" ALIGN="center">


<TR>
<TD WIDTH="34%"></TD>
<TD VALIGN="bottom"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD></TR>


<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" ALIGN="center"><B>New Hampshire</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B><FONT STYLE="white-space:nowrap">1-8858</FONT></B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B><FONT STYLE="white-space:nowrap">02-0381573</FONT></B></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="top" ALIGN="center"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>(State or other jurisdiction</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>of incorporation)</B></P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>(Commission</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>File Number)</B></P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>(IRS Employer</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>Identification No.)</B></P></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16" COLSPAN="3"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3" ALIGN="center"><B>6 Liberty Lane West, Hampton, New Hampshire</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>03842-1720</B></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="top" COLSPAN="3" ALIGN="center"><B>(Address of principal executive offices)</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>(Zip Code)</B></TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>Registrant&#146;s telephone number, including area code: (603)
<FONT STYLE="white-space:nowrap">772-0775</FONT> </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>N/A </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>(Former name or former address, if changed since last report) </B></P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><center> <P STYLE="line-height:6.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.00pt solid #000000;width:21%">&nbsp;</P></center>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Check the appropriate box below if the Form <FONT STYLE="white-space:nowrap">8-K</FONT> filing is intended to simultaneously satisfy the filing obligation of
the registrant under any of the following provisions: </P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#9744;</TD>
<TD ALIGN="left" VALIGN="top">Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#9744;</TD>
<TD ALIGN="left" VALIGN="top">Soliciting material pursuant to Rule <FONT STYLE="white-space:nowrap">14a-12</FONT> under the Exchange Act (17 CFR <FONT STYLE="white-space:nowrap">240.14a-12)</FONT> </TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#9744;</TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="white-space:nowrap">Pre-commencement</FONT> communications pursuant to Rule <FONT STYLE="white-space:nowrap">14d-2(b)</FONT> under the Exchange Act (17 CFR
<FONT STYLE="white-space:nowrap">240.14d-2(b))</FONT> </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#9744;</TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="white-space:nowrap">Pre-commencement</FONT> communications pursuant to Rule <FONT STYLE="white-space:nowrap">13e-4(c)</FONT> under the Exchange Act (17 CFR
<FONT STYLE="white-space:nowrap">240.13e-4(c))</FONT> </TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Indicate by check mark whether the registrant is an emerging growth company as
defined in Rule 405 of the Securities Act of 1933 (&#167;230.405 of this chapter) or Rule <FONT STYLE="white-space:nowrap">12b-2</FONT> of the Securities Exchange Act of 1934 <FONT STYLE="white-space:nowrap">(&#167;240.12b-2</FONT> of this chapter).
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Emerging growth company&nbsp;&nbsp;&#9744; </P> <P STYLE="margin-top:0pt;margin-bottom:0pt;page-break-before:always"></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section&nbsp;13(a) of the Exchange Act.&nbsp;&nbsp;&#9744; </P> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="line-height:1.0pt;margin-top:0pt;margin-bottom:0pt;border-bottom:1px solid #000000">&nbsp;</P> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="12%" VALIGN="top" ALIGN="left"><B>Item&nbsp;7.01</B></TD>
<TD ALIGN="left" VALIGN="top"><B>Regulation FD Disclosure </B></TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">The final Order of the Maine Public Utilities Commission
(&#147;MPUC&#148;), to which Item 8.01 below refers, is attached as Exhibit 99.1 to this Current Report on Form <FONT STYLE="white-space:nowrap">8-K.</FONT> </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="12%" VALIGN="top" ALIGN="left"><B>Item&nbsp;8.01</B></TD>
<TD ALIGN="left" VALIGN="top"><B>Other Events </B></TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">On February&nbsp;28, 2018 the MPUC issued its final Order (the
&#147;Order&#148;) in Docket No.&nbsp;2017-00065, the distribution base rate case filed in May 2017 by the Maine division of Northern Utilities, Inc. (the &#147;Company&#148;), Unitil Corporation&#146;s natural gas utility subsidiary operating in
Maine and New Hampshire. The Order would have resulted in a revenue increase of $2,072,647, prior to incorporating the effect of a lower federal income tax rate under the Tax Cuts and Jobs Act of 2017. Incorporating the effect of the lower tax rate
resulted in a revenue decrease of $87,243. The Order also provides for a reduction in annual depreciation expense reducing the Company&#146;s annual operating costs by approximately $500,000. The Order addresses a number of other issues including a
change to therm billing, increases in other delivery charges, and cost recovery under the Company&#146;s Targeted Area Buildout program in Saco, Maine (&#147;Saco TAB&#148;) and Targeted Infrastructure Replacement Adjustment (&#147;TIRA&#148;)
program. The new rates and other changes are effective as of March&nbsp;1, 2018. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">The distribution base rate case is based on the
Company&#146;s operating costs and investments in utility plant for a test year ended December&nbsp;31, 2016 as adjusted for known and measurable changes. The MPUC approved a return on equity of 9.5&nbsp;percent and a capital structure reflecting
50&nbsp;percent equity and 50&nbsp;percent long-term debt. Additionally, the MPUC approved the inclusion of Saco TAB investments in rate base along with a cost recovery incentive mechanism. The MPUC also approved adjustments to and an extension of
the Company&#146;s TIRA for an additional eight-year period to provide for annual revenue increases associated with specified targeted operational and safety-related infrastructure replacement and upgrade projects. </P>
<P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="12%" VALIGN="top" ALIGN="left"><B>Item&nbsp;9.01</B></TD>
<TD ALIGN="left" VALIGN="top"><B>Financial Statements and Exhibits </B></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">(d)</TD>
<TD ALIGN="left" VALIGN="top">Exhibits </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="92%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:8pt" ALIGN="center">


<TR>
<TD></TD>
<TD VALIGN="bottom" WIDTH="5%"></TD>
<TD WIDTH="92%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom" NOWRAP ALIGN="center"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-bottom:1.00pt solid #000000; width:26.20pt; display:inline; font-size:8pt; font-family:Times New Roman; " ALIGN="center">Number</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-bottom:1.00pt solid #000000; width:23.50pt; display:inline; font-size:8pt; font-family:Times New Roman; ">Exhibit</P></TD></TR>


<TR STYLE="font-size:1pt">
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" NOWRAP>99.1</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"><A HREF="d547378dex991.htm">Maine Public Utilities Commission Order dated February&nbsp;28, 2018 </A></TD></TR>
</TABLE>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">SIGNATURES </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized. </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="40%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt">


<TR>
<TD WIDTH="7%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="92%"></TD></TR>


<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3">UNITIL CORPORATION</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">By:</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">/s/ Mark H. Collin</P></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">Mark H. Collin</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">Senior Vice President, Chief Financial Officer and Treasurer</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16" COLSPAN="3"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3">Date: March&nbsp;6, 2018</TD></TR>
</TABLE>
</BODY></HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>d547378dex991.htm
<DESCRIPTION>EX-99.1
<TEXT>
<HTML><HEAD>
<TITLE>EX-99.1</TITLE>
</HEAD>
 <BODY BGCOLOR="WHITE">

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="right"><B>Exhibit 99.1 </B></P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>REDACTED </B></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="38%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="39%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="21%"></TD></TR>


<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">STATE OF MAINE</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><FONT STYLE="white-space:nowrap">Docket&nbsp;No.&nbsp;2017-00065</FONT></P></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">PUBLIC UTILITIES COMMISSION</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">February&nbsp;28, 2018</P></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">NORTHERN UTILITIES, INC. d/b/a UNITIL</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">ORDER</P></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Request for Approval of Rate Change</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>(Corrected)<SUP STYLE="font-size:85%; vertical-align:top">1</SUP></B></P></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Pursuant to Section&nbsp;307</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD></TR>
</TABLE> <P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">VANNOY, Chairman; WILLIAMSON and DAVIS, Commissioners </P>
<P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><B>I.</B></TD>
<TD ALIGN="left" VALIGN="top"><B>SUMMARY </B></TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In this Order, the Commission rejects as unjust and unreasonable the proposed
increase by Northern Utilities Inc. d/b/a Unitil (Northern or the Company) in its delivery rates of $3,481,567, as initially proposed by Northern on May&nbsp;31, 2017 and as finally amended in the Company&#146;s January&nbsp;16, 2018 filing which
incorporated the effect of the recently enacted Tax Cuts and Jobs Act of 2017 (TCJA). The Company&#146;s January&nbsp;16, 2018 filing was a modification to both its May&nbsp;31, 2017 proposed increase and its January&nbsp;8, 2018 Revised Rebuttal
Testimony proposed increase. In its place, the Commission orders the Company to decrease its delivery rates by $87,243 as of March 1, 2018. The Commission&#146;s decision is based on a cost of equity of 9.50% and reflects the decrease to the
Company&#146;s allowed tax expense as a result of the recently enacted TCJA. The computations supporting this decision are attached hereto and marked Exhibits 1 through 5. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><B>II.</B></TD>
<TD ALIGN="left" VALIGN="top"><B>PROCEDURAL HISTORY </B></TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">On May&nbsp;31, 2017, pursuant to
<FONT STYLE="white-space:nowrap">35-A</FONT> M.R.S. &#167;&#167; 307 and 312 and Chapters 110 and 120 of the Commission&#146;s Rules, Northern filed a request to increase its natural gas distribution base rates. In its initial filing, Northern
requested that the Commission approve an annual increase of $5,981,413 in distribution revenues based upon a test year ending December&nbsp;31, 2016, an overall return on rate base of 8.30&nbsp;percent, and known and measurable adjustments to test
year revenues, expenses and rate base. The requested increase would result in a 7.1&nbsp;percent increase over the Company&#146;s test year operating revenues. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Additionally, Northern requested that the Commission extend the Company&#146;s Targeted Infrastructure Replacement Adjustment mechanism (TIRA)
for an additional four years. The TIRA is a capital cost recovery mechanism designed to recover the costs of certain targeted improvements and upgrades to the Company&#146;s distribution system, including the Company&#146;s Cast Iron Replacement
Program (CIRP) and other operational and safety-related system improvements. The Company also proposed that costs related to excess flow valves (EFVs) be included within the TIRA. The first annual adjustment under the TIRA extension was proposed for
May&nbsp;1, 2018, to recover the Company&#146;s 2017 cost of these programs. </P> <P STYLE="line-height:8.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000;width:10%">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><SUP STYLE="font-size:85%; vertical-align:top">1</SUP>&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">This Corrected Order corrects editorial and typographical errors on pages 4 and 15 of the original Order. The corrections are noted in bold. </TD></TR></TABLE>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-2-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Northern&#146;s initial filing consisted of the testimony of: David Chong, Director of Finance
and Treasurer for Unitil Service Corp. (description of base rate request, overall revenue requirements, pro forma adjustments from the test year and TIRA); Christopher Leblanc and Kevin Sprague, Vice President of Gas Operations and Director of
Engineering, respectively, for Unitil Service Corp. (description of issues related to TIRA and other capital investment issues, including the inclusion of EFVs); Elizabeth Shaw, Director of Human Resources for Unitil Service Corp. (description of
salary and wage policies and employee retiree benefit plans included in the Company&#146;s cost of service, including pro forma adjustments); Keith Hanson, Senior Accountant for Unitil Service Corp. <FONT STYLE="white-space:nowrap">(lead-lag</FONT>
study and cash working capital requirements); Paul Normand and Debbie Gajewski of Management Applications Consulting (MAC) (depreciation study, accounting and marginal cost of service studies, revenue adjustments, transition from ccf to therm
billing, and rate design); and Robert Hevert of Scott Madden, Inc. (cost of capital and return on equity analysis). </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">A Notice of
Proceeding, which provided interested persons with an opportunity to intervene in this matter was issued on June&nbsp;5, 2017. The Office of the Public Advocate (OPA) filed a petition to intervene, which was granted without objection at an initial
case conference held on June&nbsp;15, 2017. On June&nbsp;20, 2017, the Hearing Examiner issued a procedural order extending the time period in which Northern customers could file a petition to intervene, due to a prior notice not being received by
customers until after the deadline for filing for intervention had passed. Northern was directed to send out a revised customer notice with the intervention date extended until July&nbsp;14, 2017. No further requests for intervention were received.
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Technical conferences on the Company&#146;s Direct Testimony were held on July&nbsp;19, 2017, August&nbsp;2, 2017, and August&nbsp;3,
2017. On August&nbsp;18, 2017, Northern filed Supplemental Testimony concerning the Saco Targeted Area Buildout (Saco TAB). In its Supplemental Testimony, Northern stated that although its Saco TAB plant was recorded as construction work in progress
at the end of the test year, it was operationally in service as of December&nbsp;31, 2017, and therefore should be recovered in this rate proceeding. The proposed revenue requirement associated with the Saco TAB was $677,008. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The OPA submitted the Direct Testimony of Lafayette Morgan and Jerome Mierzwa in response to the Company&#146;s case on August&nbsp;31, 2017.
A technical conference on both the OPA&#146;s Direct Testimony and Northern&#146;s Supplemental Testimony was held on September&nbsp;19, 2017. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">On October&nbsp;6, 2017, Staff filed its Bench Analysis, along with a Bench Report from the Staff&#146;s consultant, William Dunkel
(Mr.&nbsp;Dunkel). A technical conference on the Staff&#146;s Bench Analysis and Bench Report was held on October&nbsp;25, 2017, and a public witness hearing was held on October&nbsp;12, 2017, in Portland, Maine. No member of the public testified at
the hearing.<SUP STYLE="font-size:85%; vertical-align:top">2</SUP> </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&nbsp;&nbsp;</P>
<P STYLE="line-height:8.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000;width:10%">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><SUP STYLE="font-size:85%; vertical-align:top">2</SUP>&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">A comment was received from a member of the public who was unable to appear at the public witness hearing.
</P></TD></TR></TABLE>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-3-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Northern and the OPA submitted Rebuttal Testimony on November&nbsp;13, 2017. Northern&#146;s
Rebuttal Testimony included updates to its revenue requirement to reflect known and measurable changes. A technical conference on Northern&#146;s Rebuttal Testimony was held on November&nbsp;29, 2017. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">On December&nbsp;5, 2017, Staff filed the Reply Bench Report of Mr.&nbsp;Dunkel in response to the Company&#146;s Rebuttal Testimony on
depreciation issues. A technical conference on Mr.&nbsp;Dunkel&#146;s Reply Bench Report was held on December&nbsp;8, 2017. A <FONT STYLE="white-space:nowrap">pre-hearing</FONT> conference was held on December&nbsp;11, 2017. Hearings on the prefiled
testimony of the OPA and Northern, along with the Staff&#146;s Bench Analysis, were held on December&nbsp;13, 2017 and December&nbsp;14, 2017. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Company subsequently updated its revenue requirement again on January 8, 2018, to reflect the Company&#146;s most recent actual and
projected rate case expense and a post-hearing known and measurable change to insurance expense. In its January&nbsp;8, 2018 filing, Northern&#146;s proposed revenue requirement increase was $6,547,173. The Company and the OPA filed briefs and reply
briefs in support of their respective positions on January&nbsp;12, 2018 and January&nbsp;19, 2018. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">On December&nbsp;22, 2017, the
President signed the TCJA, which reduces the federal corporate tax rate from 35% to 21% effective January&nbsp;1, 2018. On January&nbsp;3, 2018, the Hearing Examiner issued a Procedural Order directing Northern to file a statement which calculates
the amount of excess deferred income taxes (EDIT) which result from the tax rate change and how the Company plans to flow such EDIT back to ratepayers. The Hearing Examiner also proposed to take administrative notice of this federal legislation and
to incorporate the change into the calculations of the <FONT STYLE="white-space:nowrap">gross-up</FONT> required to provide the Company its allowed Return on Equity (ROE) and in all other instances where the
<FONT STYLE="white-space:nowrap">pre-tax</FONT> weighted average cost of capital (WACC) is utilized on a going forward basis. No party objected to this proposal. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">On January&nbsp;16, 2018, Northern made its filing updating schedules to reflect the effect of the TCJA to the Company&#146;s proposed revenue
requirement. Northern&#146;s revised proposed revenue requirement is $3,481,567. The filing also indicated that on or before January&nbsp;26, 2018, the Company would file its proposed excess Accumulated Deferred Income Tax (ADIT) Regulatory
Liability amortization amount. A conference of counsel to discuss the processing of the impacts of the recently enacted tax change was held on January&nbsp;18, 2018. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">On January&nbsp;26, 2018, Northern submitted its filing of the impact of the TCJA on the Company&#146;s deferred taxes. In addition, on that
date, the Company filed Supplemental Testimony of Robert Hevert regarding the impact of the TCJA on the </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-4-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">utility industry generally and on the Company&#146;s cost of capital in this case. On January&nbsp;29, 2018, the
Company submitted attachments to Mr.&nbsp;Hevert&#146;s Supplemental Testimony. The Company requested that Mr.&nbsp;Hevert&#146;s Supplemental Testimony and attachments be included in the record in this case. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">A technical conference on the Company&#146;s TCJA filing was held on January&nbsp;30, 2018. The Hearing Examiner denied the Company&#146;s
request to include Mr.&nbsp;Hevert&#146;s Supplemental Testimony and attachments in the record on February&nbsp;1, 2018. Northern filed a Motion for Reconsideration and Rehearing of the Examiner&#146;s Ruling on February 7, 2018. The OPA filed a
Response In Opposition to Northern&#146;s Motion on February&nbsp;13, 2018. On this same date, the Commission is issuing a decision which denies Northern&#146;s Motion and upholds the Examiner&#146;s Ruling of February&nbsp;1, 2018. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">On February&nbsp;7, 2018, the Hearing Examiners in the case issued their Examiners&#146; Report which contained the recommendations of the
Commission Staff. On February 14, 2018, the Company filed exceptions to the Examiners&#146; Report and the OPA filed comments on the Report. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><B>III.</B></TD>
<TD ALIGN="left" VALIGN="top"><B>TAX CUTS AND JOBS ACT OF 2017 </B></TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In its January&nbsp;16, 2018 filing updating the rate
schedules to incorporate the effect of the TCJA, Northern stated that the tax change resulted in a proposed reduction of $2,876,762 from its updated revenue requirement (including the reduction to the Saco TAB revenue requirement) and yielded a
proposed revenue requirement increase of $3,481,567.<SUP STYLE="font-size:85%; vertical-align:top">3</SUP> The methodology used by Northern to calculate the effect employs a formula specified in Federal Energy Regulatory Commission (FERC) Order 475
(June 26, 1987), published when tax rates last changed. As proposed by Northern, this FERC methodology calculates the reduction in income tax expense resulting from the lower tax rate. The calculation begins with the pro forma income taxes in the
cost of service after the full amount of rate relief calculated at the tax rate in effect during the test year, and prorates that tax amount by the new rate divided by the old rate. Tr. at 6 (Jan. 18, 2018). The result is the tax expense at the new
lower rate. The overall revenue requirement is the revenue deficiency determined in this rate case, less the calculated reduction in income tax expense.&nbsp;&nbsp;&nbsp;&nbsp;The Commission accepts this proposed methodology for determining the
effect on revenue requirements of the change in the tax rate. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Northern&#146;s calculations reflect its positions on the issues to be
determined in this case and incorporate the reduction in the federal corporate tax rate. The Commission&#146;s determinations in this case would have resulted in an overall increase of <B>$2,072,647,</B> prior to incorporating the effect of the
reduced tax rate. Incorporating the effect of the tax rate reduction using the Company&#146;s proposed methodology as set forth in its January&nbsp;16, 2018 filing results in a revenue decrease of <B>$87,243.</B> </P>
<P STYLE="line-height:8.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000;width:10%">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><SUP STYLE="font-size:85%; vertical-align:top">3</SUP><SUP STYLE="font-size:85%; vertical-align:top"></SUP></TD>
<TD ALIGN="left" VALIGN="top"><SUP STYLE="font-size:85%; vertical-align:top"></SUP>The revised revenue requirement also incorporates an update to rate case expenses and changes to the WACC resulting from an update to the cost of long-term debt.
</TD></TR></TABLE>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-5-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">As noted in its January&nbsp;16, 2018 filing, the tax rate reduction also requires the Company to
revalue downward the net ADIT liabilities on its balance sheet. In accordance with Generally Accepted Accounting Principles (GAAP), the resulting excess ADIT will be recognized on the Company&#146;s books as a Regulatory Liability. Northern proposes
to use the Average Rate Assumption Method (ARAM) to pass back to ratepayers the EDIT. In its January&nbsp;26, 2018 filing, Northern provided the calculation of its proposed EDIT amortization amount in accordance with ARAM. Northern noted that
because its book depreciation does not exceed tax depreciation until 2020, and the amortization of EDIT will not begin until then, no change in rates is required at this time. The Commission accepts Northern&#146;s calculations and statement that no
change in rates is necessary, and directs that Northern not begin amortizing the regulatory liability created for the EDIT on its books until such time as its book depreciation exceeds its tax depreciation. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Lastly, in its January&nbsp;16, 2018 filing, Northern urged the Commission to weigh any potential credit implications and an increase in the
Company&#146;s cost of capital associated with reduced cash flow resulting from the tax rate change. As noted in the </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">February&nbsp;1, 2018 Examiner&#146;s
Ruling in this case, such impacts are not clearly defined or quantified at this point and the Commission makes no adjustment to cost of capital, cost of equity or revenue requirements on this basis.&nbsp;&nbsp;&nbsp;&nbsp;This does not preclude the
Company from requesting that the Commission open an investigation into the impact of the TCJA on its ROE and the resulting impact on its rates pursuant to the provisions of <FONT STYLE="white-space:nowrap">35-A</FONT> M.R.S. &#167;
1302.&nbsp;&nbsp;&nbsp;&nbsp; </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><B>IV.</B></TD>
<TD ALIGN="left" VALIGN="top"><B>COST OF CAPITAL </B></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">A.</TD>
<TD ALIGN="left" VALIGN="top"><U>Positions of the Parties</U> </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">1.</TD>
<TD ALIGN="left" VALIGN="top"><U>Northern</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In its Brief, Northern argues that the Commission should adopt a 10.30% ROE as
recommended by its witness, Mr.&nbsp;Hevert, and a capital structure that consists of 51.70% common equity and 48.30% long-term debt. Although in its initial filing Northern had proposed a 6.16% cost of long-term debt, in its Brief, the Company
agrees that the cost of long-term debt used in this case should be modified to reflect new debt issuances in November 2017 and a sinking fund payment on its existing 6.95% debt in December 2017, thereby reducing the cost of long-term debt to 5.55%.
Northern Brief at 42. Combining the updated weighted average cost of long-term debt with Northern&#146;s recommended capital structure and an ROE of 10.30%, results in an <FONT STYLE="white-space:nowrap">after-tax</FONT> WACC of 8.01%. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Northern states that it does not find the recommendation in Staff&#146;s Bench Analysis of a hypothetical 50% common equity layer to be
unreasonable.<I> Id.</I> at 39. Nevertheless, Northern continues to support its proposed capital structure and argues that its test <FONT STYLE="white-space:nowrap">year-end</FONT> capital structure, which includes 51.7% common equity and 48.3%
long-term debt, is reasonable, consistent with industry averages and the Company&#146;s </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-6-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
financing goals and objectives, and supports the financial profile required to ensure access to capital markets. <I>Id.</I> at 38. Additionally, Northern argues that its proposed capital
structure is consistent with the Company&#146;s proforma <FONT STYLE="white-space:nowrap">year-end</FONT> 2017 capital structure of 51% common equity and 49% long-term debt, reflecting the issuance of $50&nbsp;million in long-term debt in November
2017, the retirement of $10&nbsp;million in long-term debt in December 2017, the issuance by Unitil Corporation of a $30&nbsp;million equity offering late in 2017 and its commitment to make a $32&nbsp;million equity contribution to Northern.
<I>Id.</I> at 39. Northern objects to the inclusion of any short-term debt in the capital structure, arguing that including a short-term debt component for ratemaking purposes is not matched to or consistent with the long-term nature of utility
assets. <I>Id.</I> at 40. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In his initial testimony, Northern&#146;s cost of capital expert, Mr.&nbsp;Hevert, develops a cost of equity in
the range of 10.00% to 10.60% and recommends an ROE of 10.30%. In developing his recommendation, Mr.&nbsp;Hevert first identifies a peer group of utilities and then employs several methodologies to estimate Northern&#146;s ROE, including the
Discounted Cash Flow (DCF) model (using a Constant Growth and Multi-Stage form), the Capital Asset Pricing Model (CAPM) and the Bond Yield Plus Risk Premium approach. Mr.&nbsp;Hevert&#146;s DCF results range from 7.47% to 11.81% with a <FONT
STYLE="white-space:nowrap">mid-point</FONT> of 9.64%. Hevert Dir. Test. at 56. Additionally, although he did not recommend a specific adjustment to the ROE, Mr.&nbsp;Hevert calculated a flotation cost adjustment of 11 basis points, stating that the
effect of flotation costs, in addition to the Company&#146;s other business risks, should be considered in determining where Northern&#146;s ROE falls within the range of analytical results. Hevert Dir. Test. at
<FONT STYLE="white-space:nowrap">35-38.</FONT> </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In his Rebuttal Testimony, Mr.&nbsp;Hevert provided an update to his analysis and also
included an updated DCF analysis based on Staff&#146;s methodology but with a revised proxy group and updated market information as of September&nbsp;29, 2017. Hevert Reb. Test. at 11. This updated analysis produces a DCF range of 8.70% to 9.46%
with a <FONT STYLE="white-space:nowrap">mid-point</FONT> of 9.22%. In addition, Mr.&nbsp;Hevert provided an updated CAPM analysis, using both current <FONT STYLE="white-space:nowrap">30-year</FONT> Treasury rates and projected long-term Treasury
rates as the risk-free rate. Mr.&nbsp;Hevert&#146;s CAPM analysis produced a range of 9.77% to 11.64% using the then current Treasury rate of 2.77% and 10.30% to 12.17% using the projected Treasury rate of 3.30%. Combining the Company&#146;s
recommended capital structure with the adjusted cost of long-term debt and an ROE of 10.30% produces an <FONT STYLE="white-space:nowrap">after-tax</FONT> WACC of 8.01%. Northern Brief at 37. </P>
<P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">2.</TD>
<TD ALIGN="left" VALIGN="top"><U>Office of the Public Advocate</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The OPA states that the Commission should adopt a 9.15%
cost of equity for Northern as recommended by the OPA&#146;s witness in his direct testimony. OPA Brief at 20. In his testimony, Mr.&nbsp;Morgan did not present a cost of equity analysis but, rather, bases his recommendation on the DCF results
presented by the Company&#146;s witness. To derive his recommendation, Mr.&nbsp;Morgan used only the average mean growth rate results from Mr.&nbsp;Hevert&#146;s three DCF approaches. This produces an indicated ROE with a range from 8.61% to 9.69%
and an average of 9.15%. Morgan Dir. Test. at <FONT STYLE="white-space:nowrap">21-22.</FONT> </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-7-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The OPA also recommends that the cost of Northern&#146;s long-term debt be adjusted to reflect
the known and measurable change associated with the retirement of $10&nbsp;million in 6.96% debt in December 2017 and the issuance of $50&nbsp;million in new long-term debt in November 2017. This adjustment would reduce the cost of long-term debt to
5.56%.<SUP STYLE="font-size:85%; vertical-align:top">4</SUP> OPA Brief at 19. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The OPA agrees with the capital structure proposed by Staff
in its Bench Analysis, which consists of a hypothetical equity component of 50%, long-term debt equal to 49.18% and short-term debt of 0.82%. The OPA argues that this proposed capital structure is close to the structure proposed by the Company and
is <FONT STYLE="white-space:nowrap">in-line</FONT> with the hypothetical equity component the Commission approved for another Maine gas utility that is a subsidiary of a larger company. Additionally, the OPA notes that although Northern has not
incorporated this proposed equity layer, the Company does acknowledge that 50% common equity reflects a reasonable capital structure that is in line with its actual equity, its long-term financing activities and targets, and with the average equity
ratio of its peer group. OPA Brief at 22, citing Chong Reb. Test. at <FONT STYLE="white-space:nowrap">22-23.</FONT> </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Combining the
OPA&#146;s updated weighted average cost of long-term debt with the OPA&#146;s recommended capital structure and an ROE of 9.15% results in an <FONT STYLE="white-space:nowrap">after-tax</FONT> WACC of 6.93%. </P>
<P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">3.</TD>
<TD ALIGN="left" VALIGN="top"><U>Bench Analysis</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In its Bench Analysis, the Staff recommended an ROE of 9.50%; the use of
a hypothetical capital structure which includes a common equity layer of 50% and a component of short-term debt; and adjustments to the cost of long-term debt to reflect the retirement of $10&nbsp;million in 6.95% debt in December 2017 and the
issuance of $50&nbsp;million in new long-term debt at a weighted average cost of 4.00% in November 2017. These changes result in an <FONT STYLE="white-space:nowrap">after-tax</FONT> WACC of 7.50%. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In arriving at its ROE recommendation, the Staff developed a proxy group of gas and electric utilities that consisted of 14 companies and used
a DCF analysis, both a constant-growth model and a <FONT STYLE="white-space:nowrap">two-stage</FONT> growth model, and a CAPM calculation as a check on the DCF results. Staff developed a DCF range of 8.24% to 9.54% and a CAPM range of 9.29% to
11.10%. Staff&#146;s analysis included two companies in the proxy group which were included in error. <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">ODR-006-002.</FONT></FONT> As noted above, Mr.&nbsp;Hevert&#146;s Rebuttal
Testimony included an updated DCF analysis based on Staff&#146;s methodology, which produces a DCF range of 8.70% to 9.46% with a <FONT STYLE="white-space:nowrap">mid-point</FONT> of 9.22%. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Staff additionally recommended the use of a hypothetical capital structure with a common equity layer of 50% and the inclusion of a component
of short-term debt at a cost equal to Northern&#146;s most recent cost of short-term borrowings, resulting in a capital structure that includes 49.18% of long-term debt and 0.82% of short-term debt. Staff derived the short-term debt component based
on the calculation of cash working capital </P> <P STYLE="line-height:8.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000;width:10%">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><SUP STYLE="font-size:85%; vertical-align:top">4</SUP>&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">Northern calculates the adjusted cost of long-term debt to be 5.55%. <FONT STYLE="white-space:nowrap"><FONT
STYLE="white-space:nowrap">ODR-003-032.</FONT></FONT> </P></TD></TR></TABLE>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-8-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
needs set forth in the <FONT STYLE="white-space:nowrap">lead-lag</FONT> study filed by the Company. With respect to the cost of the long-term debt component of Northern&#146;s capital structure,
Staff recommended that the cost of long-term debt should be reduced from 6.16% as filed by Northern to 5.55%. This reduction in the cost of long-term debt reflects the impact on the weighted average cost of debt of two known and measurable changes
to the Company&#146;s outstanding debt discussed above that are effective prior to the rate effective date. <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">ODR-003-002.</FONT></FONT> </P>
<P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">B.</TD>
<TD ALIGN="left" VALIGN="top"><U>The Hope-Bluefield Standard</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Two United States Supreme Court decisions of more than 70
years ago, known as the <I>Bluefield</I> and <I>Hope</I> cases, provide the standards for measuring the reasonableness of a utility&#146;s allowed ROE. Taken together, the <I>Hope-Bluefield</I> decisions establish that: </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman">A public utility is entitled to such rates as will permit it to earn a return on the value of the property which it employs for the convenience
of the public equal to that generally being made&#133;on investments in other business undertakings which are attended by corresponding risks and uncertainties&#133;The return should be reasonably sufficient to assure confidence in the financial
soundness of the utility, and should be adequate, under efficient and economical management, to maintain and support its credit and enable it to raise the money necessary for the proper discharge of its public duties </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Bluefield Water Works and Improvement Co. v. Public Service Commission of West Virginia,</I> 262 U.S. 679 (1923). </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Additionally, the idea of associating the allowed return to a common equity owner with those available from other companies of comparable risk
was established in the <I>Hope</I> decision: </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman">[T]he return to the equity owner should be commensurate with the return on investment in
other enterprises having corresponding risks. That return, moreover, should be sufficient to assure confidence in the financial integrity of the enterprise, so as to maintain its credit and to attract capital. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Federal Power Commission v. Hope Natural Gas Co.</I>, 320 U.S. 591 (1944). </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Thus, the practice of determining an appropriate ROE for a company that is not publicly traded such as Northern is one that involves developing
a comparable group of companies, for which market-based information is available, that are in the same business and that present similar financial risks. The <I>Hope-Bluefield</I> standard has long served as the benchmark against which this
Commission measures an appropriate ROE. </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-9-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>

<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">C.</TD>
<TD ALIGN="left" VALIGN="top"><U>Discussion and Decision</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">As noted, both the Company and the OPA agree with the
recommendation in the Staff&#146;s Bench Analysis that the cost of the long-term debt component of the capital structure should be updated to reflect the impact of the December 2017 sinking fund payment and the November 2017 issuance of
$50&nbsp;million in new long-term debt. OPA Brief at 19; Northern Brief at 42. Northern has calculated that including these adjustments would reduce the weighted average cost of debt from 6.16% to 5.55%. <FONT STYLE="white-space:nowrap"><FONT
STYLE="white-space:nowrap">ODR-003-032.</FONT></FONT> The Commission finds that reducing the cost of long-term debt for these known and measurable changes is reasonable. With this agreement and Commission finding, there remain two crucial factors
associated with the cost of capital that must be determined; the capital structure and the allowed return on equity. Additionally, the enactment of the Tax Cuts and Jobs Act of 2017 has implications on the
<FONT STYLE="white-space:nowrap">pre-tax</FONT> WACC that is required for calculations associated with the TIRA recovery mechanism and the Saco TAB as discussed below. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">1.</TD>
<TD ALIGN="left" VALIGN="top"><U>Capital Structure</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">As noted, Northern urges the Commission to adopt a capital structure
based on its actual <FONT STYLE="white-space:nowrap">year-end</FONT> 2016 balances which consists of 51.70% common equity and 48.30% long-term debt. The OPA and Commission Staff recommend a hypothetical capital structure which consists of 50% common
equity, 0.82% of short-term debt and 49.18% of long-term debt. Notwithstanding its recommended capital structure, Northern has acknowledged that a capital structure with a 50% common equity layer is reasonable. Although he took exception to the
inclusion of a short-term debt component, Mr.&nbsp;Chong testified, &#147;Staff&#146;s proposed capital structure closely matches the actual current capital structure of the Company, reflects the Company&#146;s targeted long-term equity ratio at
current market and regulatory conditions, and is reasonably representative of the Company&#146;s long-term financing activities.&#148; Chong Reb. Test. at <FONT STYLE="white-space:nowrap">22-23.</FONT> </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Commission finds that the use of a hypothetical capital structure consisting of 50% common equity and 50% debt is reasonable for
ratemaking purposes. As noted by the OPA, the use of a hypothetical capital structure is consistent with the capital structure approved for another Maine gas utility that is a subsidiary of a larger company. OPA Brief at 22. Additionally, a 50%
common equity layer is consistent with the common equity ratio of the proxy group used in the ROE analysis. Hevert Reb. Test. at 15. The use of a hypothetical 50/50 capital structure relieves any concern that the structure is based on a specific
point in time and, thus, susceptible to wide variability over time. We decline to include a component of short-term debt in the Company&#146;s capital structure as recommended in the Staff&#146;s Bench Analysis. </P>
<P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">2.</TD>
<TD ALIGN="left" VALIGN="top"><U>Return on Equity</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">As an initial matter, although there are differences between the proxy
group used by the Company and the proxy group used in the Commission Staff analysis, there is substantial overlap of the proxy groups. The Staff and the Company each used a proxy group of 12 companies and nine are common to both. This sample size is
large enough and consistent enough to allow a meaningful analysis of market returns. </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-10-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">As noted, two companies in Staff&#146;s proxy group presented in the Bench Analysis were included
in error. Staff did not file a reply bench analysis in this case, which would have afforded an opportunity to update the ROE analysis both to reflect more current market information and to adjust its proxy group. As noted above, in his Rebuttal
Testimony, Mr.&nbsp;Hevert provided an updated analysis based on Staff&#146;s methodology and with market data from September&nbsp;29, 2017, but with a revised Staff proxy group that removed the two companies included in error. Hevert Reb. Testimony
at 11. In addition, Mr.&nbsp;Hevert removed one company from Staff&#146;s proxy group because its growth rate and DCF results were so low as to be unreasonable. <I>Id.</I> at 10. Although the Commission does not necessarily agree with all the
adjustments made by Mr.&nbsp;Hevert to Staff&#146;s proxy group, the proxy group is substantially the same as that recommended by Staff and the methodology used by Mr.&nbsp;Hevert is identical. Thus, the updated Staff DCF analysis presented by
Mr.&nbsp;Hevert in his Rebuttal Testimony is reasonably representative of a corrected and updated analysis had one been done by Staff. <I>Id.</I> at 12. This updated DCF analysis produces the indicated ROE range as shown in Figure IV.1 below. </P>
<P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Figure IV.1 </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Updated Staff DCF
Analysis </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="84%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="82%"></TD>
<TD VALIGN="bottom" WIDTH="4%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="4%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="4%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">Low</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">High</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">Mean</TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>


<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Staff Revised Proxy Group</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Constant Growth DCF Model</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">8.98</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">9.46</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">9.22</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><FONT STYLE="white-space:nowrap">Two-Step</FONT> DCF Model</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">8.70</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">8.86</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">8.78</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In his rebuttal testimony, Mr.&nbsp;Hevert also updated his DCF analysis to reflect current market data as
shown in Figure IV.2 below.<SUP STYLE="font-size:85%; vertical-align:top">5</SUP> <I>Id.</I> at 16. </P> <P STYLE="line-height:8.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000;width:10%">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><SUP STYLE="font-size:85%; vertical-align:top">5</SUP>&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">The Commission notes that the upper end of the ROE range produced by Mr.&nbsp;Hevert&#146;s Constant Growth DCF analysis is more than 100 basis points higher than the upper end of the ranges produced by the other <FONT
STYLE="white-space:nowrap">DCF-based</FONT> analyses in the record and is the only one above 11%. It appears that this <FONT STYLE="white-space:nowrap">high-end</FONT> number results in large part from the effect of one particular proxy group member
used in Mr.&nbsp;Hevert&#146;s analysis with a high estimated growth rate. Specifically, Mr.&nbsp;Hevert used an earnings growth rate of 15.84% for Chesapeake Utilities Corporation, significantly higher than the earnings growth rate used for most of
the remainder of the proxy group. In all variations of the Constant Growth DCF analysis provided by Mr.&nbsp;Hevert, the results for Chesapeake Utilities set the upper end of the ROE range. Hevert Reb. Exhibit
<FONT STYLE="white-space:nowrap">RBH-1.</FONT> </TD></TR></TABLE>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-11-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Figure IV.2 </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Hevert Rebuttal DCF Results </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="84%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="80%"></TD>
<TD VALIGN="bottom" WIDTH="4%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="4%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="4%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B></B>Low<B></B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B></B>High<B></B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B></B>Mean<B></B></TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>


<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Hevert Rebuttal DCF</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Constant Growth DCF</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">7.19</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">11.26</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">9.23</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Multi-Stage DCF</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">7.52</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">10.24</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">8.88</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Consistent with our practice, the Commission relies primarily on a discounted cash flow analytical structure
to determine an appropriate ROE and uses CAPM results as a check on the DCF results. <I>See, e.g. Investigation of Central Maine Power Company, Company&#146;s Revenue Requirements and Rate Design (Phase II)</I>, Docket No.&nbsp;1997-00580, Order,
(January 19, 2000) <FONT STYLE="white-space:nowrap">(97-580)</FONT> and <I>Emera Maine, Request for Approval of a Proposed Rate Increase, </I>Docket No.&nbsp;2015-00360, Order&#151;Part II (Dec. 22, 2016). The Commission&#146;s reliance on the DCF
market-oriented approach to determine the common-equity cost for the Company is consistent with the <I>Hope- Bluefield </I>standard in that it incorporates the equity returns that investors currently expect to receive from investing in companies
with risks similar to Northern. The indicated ROE supported by the DCF evidence ranges from a low of 7.19% to a high of 11.26% with a <FONT STYLE="white-space:nowrap">mid-point</FONT> of 9.23%. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Company and the Staff also provided the results of CAPM analyses which we use as a check to the DCF results. The results of Staff&#146;s
CAPM analysis indicate an ROE range of 9.29% to 11.10%. Bench Analysis at 16. In his rebuttal testimony, Mr. Hevert updated his CAPM results to reflect adjustments to his proxy group and more recent market information. Consistent with the
Commission&#146;s preference as indicated in <FONT STYLE="white-space:nowrap">97-580,</FONT> we consider the CAPM results that are based on current Treasury rates rather than a forecast of interest rates. Mr.&nbsp;Hevert&#146;s CAPM results based on
current Treasury rates indicate an ROE range of 9.77% to 11.64%. Hevert Reb. Test. at 26. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">As noted, the Commission&#146;s practice is to
rely primarily on the DCF methodology results and to use the CAPM results as a check on the reasonableness of the DCF results. The DCF analyses produce an indicated range of ROEs from 7.19% to 11.26% with a
<FONT STYLE="white-space:nowrap">mid-point</FONT> of 9.23%. Although the <FONT STYLE="white-space:nowrap">low-end</FONT> of the CAPM results overlap with the high end of the DCF results, generally, the CAPM results suggest a higher ROE range and
indicate that it may be appropriate to adjust Northern&#146;s awarded ROE to a level that is above the <FONT STYLE="white-space:nowrap">mid-point</FONT> of the DCF results. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Commission is cognizant of current equity market conditions and the characteristics of different analytical tools used to estimate a
company&#146;s cost of equity in a rate making proceeding and continues to have confidence in the DCF methodology. In addition, the evidence in the record in this case does not demonstrate that Northern&#146;s risk profile differs in any marked way
from the risk profile of the proxy group upon which </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-12-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
these results were determined. Nevertheless, the CAPM results and the inclusion of a floatation cost adjustment as presented in Mr.&nbsp;Hevert&#146;s Testimony support the conclusion that an ROE
of 9.50%, somewhat above the <FONT STYLE="white-space:nowrap">mid-point</FONT> of the DCF range, is an appropriate equity return for Northern. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">3.</TD>
<TD ALIGN="left" VALIGN="top"><U>Tax Cuts and Jobs Act, ROE and WACC</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The objective of cost of equity analysis is to
arrive at a determination of a market- based cost of capital which represents the return equity investors could expect from other investments of similar risk. Thus, the return on equity estimates are generally seen as
<FONT STYLE="white-space:nowrap">after-tax</FONT> returns. To translate an <FONT STYLE="white-space:nowrap">after-tax</FONT> equity return to a <FONT STYLE="white-space:nowrap">pre-tax</FONT> revenue requirement generally requires a <FONT
STYLE="white-space:nowrap">gross-up</FONT> of the allowed ROE to reflect statutory corporate income tax rates. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">As noted, the TCJA reduced
the statutory federal income tax rate from 35% to 21%. This reduction in the tax rate affects the calculation of <FONT STYLE="white-space:nowrap">pre-tax</FONT> WACC as well as other components of cost of service rate making. Northern&#146;s revenue
requirements model (Exhibit <FONT STYLE="white-space:nowrap">DLC-2)</FONT> uses an <FONT STYLE="white-space:nowrap">after-tax</FONT> ROE and WACC to calculate the return on rate base and then applies a tax
<FONT STYLE="white-space:nowrap">gross-up</FONT> to the entire calculated revenue deficiency. Consequently, with the determinations of capital structure and ROE as described above, for purposes of determining the Company&#146;s revenue requirement,
the WACC shall be 7.53% as shown in Figure IV.3 below. </P> <P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Figure IV.3 </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="84%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="79%"></TD>
<TD VALIGN="bottom" WIDTH="4%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="4%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="4%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom" NOWRAP> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-bottom:1.00pt solid #000000; width:60.15pt; display:inline; font-size:8pt; font-family:Times New Roman; "><B>Capital Structure</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>Ratios</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>Rate</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>Cost</B></TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>


<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>Long-Term Debt</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">50.00</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">5.55</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">2.78</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>Short-Term Debt</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.00</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">2.19</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.00</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>Preferred Stock</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.00</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.00</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.00</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>Common Stock</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">50.00</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">9.50</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">4.75</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="font-size:1px; ">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">100.00</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">7.53</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">For calculations associated with the Saco TAB and the annual TIRA rate adjustments, however, a <FONT
STYLE="white-space:nowrap">pre-tax</FONT> ROE and WACC are required. The tax <FONT STYLE="white-space:nowrap">gross-up</FONT> of the ROE and resulting WACC uses the new effective tax rate of 28.05% as provided by the Company in ARAM Attachment 1,
Page 2 of 2. Thus, for Saco TAB and TIRA calculations, the <FONT STYLE="white-space:nowrap">pre-tax</FONT> WACC will be 9.38% as shown in Figure IV.4. </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-13-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Figure IV.4 </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><FONT STYLE="white-space:nowrap">Pre-Tax</FONT> Weighted Average Cost of Capital </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="92%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="66%"></TD>
<TD VALIGN="bottom" WIDTH="6%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="6%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="6%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="6%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom" NOWRAP> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-bottom:1.00pt solid #000000; width:60.15pt; display:inline; font-size:8pt; font-family:Times New Roman; "><B>Capital Structure</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>Ratios</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>Rate</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>Cost</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>Pre-Tax WACC</B></TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD COLSPAN="2" VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD COLSPAN="2" VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD COLSPAN="2" VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><B></B>Tax&nbsp;Gross&nbsp;up&nbsp;Eff&nbsp;Tax<BR>rate 28.05%<B></B></TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>


<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>Long-Term Debt</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">50.00</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">5.55</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">2.78</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">2.78</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>Short-Term Debt</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.00</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">2.19</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.00</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.00</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>Preferred Stock</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.00</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.00</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.00</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.00</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>Common Stock</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">50.00</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">9.50</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">4.75</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">6.60</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="font-size:1px; ">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">100.00</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">7.53</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="12"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>Pre-Tax Weighted Average Cost of Capital</B></P></TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B></B>&nbsp;</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B></B>&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right"><B>9.38</B></TD>
<TD NOWRAP VALIGN="bottom"><B>%</B>&nbsp;</TD></TR>
</TABLE> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><B>V.</B></TD>
<TD ALIGN="left" VALIGN="top"><B>REVENUE REQUIREMENTS </B></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">A.</TD>
<TD ALIGN="left" VALIGN="top"><U><FONT STYLE="white-space:nowrap">Year-end</FONT> Rate Base</U> </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">1.</TD>
<TD ALIGN="left" VALIGN="top"><U>Positions of the Parties</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">As part of the initial filing in this case, the Company
calculated its revenue requirement using a <FONT STYLE="white-space:nowrap">year-end</FONT> rate base. The Staff and the OPA responded to the Company&#146;s proposal by both taking the position that the Company&#146;s proposal resulted in a mismatch
of costs and revenue. The mismatch results because under the Company&#146;s proposal all investments in utility plant made through the end of the test year would be closed to rate base at the end of the year and thus would be fully recovered from
ratepayers. On the other hand, the revenue associated with such plant which would not begin being collected until after year end, would not be included since the Company considers such revenues to be out of the test year. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Company argues that a <FONT STYLE="white-space:nowrap">year-end</FONT> rate base is appropriate because it better aligns expenses,
revenues and rate base with the period in which rates are going into effect and thus reduces earnings attrition. The Company notes that it is subject to earnings attrition because of its high construction costs and cites to the testimony of David
Chong which shows that the Company has not earned the return allowed in its last rate case. Northern Brief at 7. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">To address the
Company&#146;s use of the end of test year rate base the OPA proposed to adjust test year revenues to reflect an entire year&#146;s worth of revenue associated with customer growth during the test year. The OPA adjustment developed by
Mr.&nbsp;Mierzwa was based on the difference between the number of customers at the </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-14-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
end of the test year and the average number of test-year customers multiplied by the average revenue per customer by customer class. Mr.&nbsp;Mierzwa then accounted for the lost sales from the <FONT
STYLE="white-space:nowrap">G-42</FONT> customer that was lost during 2017 which was proposed by the Company. Mierzwa Dir. Test. at 17. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In
the Bench Analysis, the Staff noted that in its view, <FONT STYLE="white-space:nowrap">year-end</FONT> rate base most appropriately matches 2017 revenues, not test year revenues. Therefore, 2017 actual revenues should be used as a known and
measurable change in calculating the Company&#146;s revenue deficiency in this case. The Staff requested that the Company update its case with actual 2017 weather normalized sales data as the case progressed. The Staff noted that it would not be
necessary to update 2016 sales with the annualized effect of the TIRA rate adjustment or the large cost customer revenue adjustment since the 2017 data would fully reflect the impact of these changes. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Company counters that the Staff&#146;s position would result in a mismatch between costs and revenues since the Staff acknowledges that,
at least partially, 2017 revenues are related to investments made in 2017 and the Staff has not made any adjustment for known and measurable investments in 2017. In addition, the Company argues that if either the OPA&#146;s proposal or the
Staff&#146;s proposal is used, operating expenses would also have to be updated to reflect conditions in 2017. In support of its position, the Company cites the Commission&#146;s decision in <I>Northern Utilities d/b/a Unitil, Proposed Base Rate
Increase and Rate Design Modification, </I>Docket No.&nbsp;2011-00092, Order Approving Stipulation, (Nov. 29, 2011) (<I>2011-00092 Order) </I>and the Company&#146;s most recent rate case, <I>Northern Utilities, Inc. d/b/a Unitil, Proposed Base Rate
Increase and Rate Design Modification, </I>Docket No.&nbsp;2013-00133, Order Approving Stipulation (Dec. 27, 2013). The Company also argues that OPA&#146;s calculation is mathematically wrong since the OPA divides actual weather normalized revenue
with a simple average number of customers which does not account for the timing of customer additions during the year. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In its Brief the
OPA argues that the Company has made a number of known and measurable changes to expenses beyond 2016 including, property taxes which are based on 2018 amounts; payroll which is based on changes that will occur through January&nbsp;1, 2018; and
pension costs which are based on 2017 information. To adjust the Company&#146;s <FONT STYLE="white-space:nowrap">one-sided</FONT> calculation of revenue requirements, the Commission should either annualize Northern&#146;s test year revenues, use the
Company&#146;s 2017 revenues as proposed by Staff or alternatively, disallow Northern&#146;s proposed additions to rate base. OPA Brief at 8. In support of its position, the OPA points to the Commission&#146;s decision in <I>Camden and Rockland,
Maine and Wanakah Water Companies, RE: Proposed Increase In Rates</I>, Docket No.&nbsp;1993-00145, Order (Part II) (July 12, 1994) (<I>Camden and Rockland) </I>which set forth the &#147;matching&#148; principle and <I>Bangor Gas Company, L.L.C.,
Request for Renewal of Multi-Year Rate Plan <FONT STYLE="white-space:nowrap">(35-A</FONT> M.R.S &#167; 4706), </I>Order (Sept. 8, 2014) (<I>Bangor Gas) </I>where the Commission rejected Bangor Gas Company&#146;s (Bangor) proposed use of a <FONT
STYLE="white-space:nowrap">year-end</FONT> rate base. The OPA notes that the cases relied on by Northern, Docket Nos. 2011-00092 and 2013-00133, were both resolved by stipulation. Since the arguments on the Company&#146;s proposed use of a <FONT
STYLE="white-space:nowrap">year-end</FONT> rate base and the OPA and Staff proposals on sales adjustments are interrelated, we address these arguments together below. </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-15-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>

<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">2.</TD>
<TD ALIGN="left" VALIGN="top"><U>Decision</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">As a general matter, construction work in progress (CWIP) amounts are not
allowed in rate base and rate base is set on an average-year basis. <I>Bangor Gas </I>at 22. To the extent that <FONT STYLE="white-space:nowrap">year-end</FONT> rate base is to be used, the revenue requirement should also reflect any associated
sales growth. <I>Id. </I>In <I>Bangor Gas</I>, the Commission noted that Bangor had only proposed the addition of plant to <FONT STYLE="white-space:nowrap">year-end</FONT> rate base. The Commission found that given Bangor&#146;s growth, it was very
likely that the costs represent investment in mains and service lines that added new customers and added additional revenues for which Bangor did not make any adjustment. The Commission thus concluded that since Bangor had only adjusted rate base
without any corresponding adjustment for sales growth, the adjustment would not reflect all of the known and measurable changes associated with placing these assets into service and thus rejected Bangor&#146;s proposed use of a <FONT
STYLE="white-space:nowrap">year-end</FONT> rate base. <I>Id</I>. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In the case before us, the Company reports its test <FONT
STYLE="white-space:nowrap">year-end</FONT> rate base to be <B>$177,677,749</B>.<SUP STYLE="font-size:85%; vertical-align:top">6</SUP> This compares to its November&nbsp;30, 2016 rate base of <B>$160,899,657 </B>and December&nbsp;31, 2015 rate base
of $167,206,707. It is not possible to discern what part of the <FONT STYLE="white-space:nowrap">year-end</FONT> plant additions are growth related or revenue producing. However, based on the information provided by the Company, it is apparent that
a significant part of <FONT STYLE="white-space:nowrap">year-end</FONT> investments would produce additional revenues. For example, during the period of 2013-2016 the Company added $131,606,453 to its plant in service. EXM <FONT
STYLE="white-space:nowrap">004-001.</FONT> Of this amount, the Company considers $63,744,375 to be <FONT STYLE="white-space:nowrap">non-revenue</FONT> producing property. EXM <FONT STYLE="white-space:nowrap">004-009.</FONT> In 2016, of the
Company&#146;s total <FONT STYLE="white-space:nowrap">non-TIRA</FONT> and <FONT STYLE="white-space:nowrap">non-</FONT> TAB investments, the Company identified $2,330,917 for gas main extensions, $2,335,472 for new gas services, $1,307,751 for gas
service upgrades, and $1,004,687 for meter installations and purchases. ODR <FONT STYLE="white-space:nowrap">002-023.</FONT> </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In response
to the Company&#146;s proposal to use a <FONT STYLE="white-space:nowrap">year-end</FONT> rate base, the Staff proposed that a corresponding known and measurable adjustment to revenues be made based on 2017 actual weather-normalized revenues. The
Company was critical of the Staff&#146;s position since 2017 revenues would also reflect additional revenues produced in 2017 as a result of 2017 investment and noted that the Staff acknowledged that this mismatch would occur. But the Staff also
noted that if no adjustment were made, there would be a mismatch between plant added at the very end of 2016 and 2016 revenues since such revenues would not reflect the revenues produced by year- end plant. Tr. at
<FONT STYLE="white-space:nowrap">64-66</FONT> (Oct. 25, 2017). </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Commission agrees with the Company that the use of 2017 revenues would
likely overstate the known and measurable adjustment which would result from using 2016 <FONT STYLE="white-space:nowrap">year-end</FONT> plant balances. On the other hand, the use of 2016 revenues, without </P>
<P STYLE="line-height:8.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000;width:10%">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><SUP STYLE="font-size:85%; vertical-align:top">6</SUP>&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">This amount does not include $4,132,346 in Saco TAB investment which the Company has proposed to include in rate base in this case and which is discussed in Section V.E. </TD></TR></TABLE>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-16-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
any adjustment to reflect sales growth associated with the plant added at <FONT STYLE="white-space:nowrap">year-end,</FONT> would not reflect any of the known and measurable changes related to
placing those assets in service and would be contrary to the Commission&#146;s holding in <I>Bangor Gas.</I> </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Company also argues that
while not as extreme as the Staff&#146;s proposal, the OPA&#146;s proposal mismatches the Company&#146;s rate base and operating expenses. As part of its opposition to the OPA&#146;s annualization adjustment, the Company argues that the OPA&#146;s
methodology is critically flawed. Northern Brief at 35. The Commission agrees with the Company&#146;s point that since customer revenue is not evenly distributed during the year the OPA&#146;s calculation is likely not precise, although the degree
of the imprecision cannot be defined. More importantly, however, the Commission finds that the OPA&#146;s annualization adjustment methodology does not accurately match 2016 year- end plant additions because it is based solely on customers added in
calendar year 2016 and does not include any customers who began to take service in 2017 related to the <FONT STYLE="white-space:nowrap">year-end</FONT> investments. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Company is extremely critical of both the Staff and the OPA because they have not demonstrated the reasonableness of their adjustments.
Northern Brief at 33- 37. In making these arguments, the Company appears to misunderstand both who has the burden of proof as well as the Commission&#146;s holding in <I>Bangor Gas</I>. Under the holding in <I>Bangor Gas</I>, rate base will be
calculated on an average-year basis unless a corresponding adjustment for known and measurable sales growth associated with the <FONT STYLE="white-space:nowrap">year-end</FONT> rate base has been put forward. It is the Company, not the Staff or the
OPA who has the burden of proof on this issue. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Company notes that the Commission used a
<FONT STYLE="white-space:nowrap">year-end</FONT> rate base in calculating its revenue requirement in Docket No.&nbsp;2011-00092 and Docket No.&nbsp;2013- 00133. Those cases, however, were resolved by stipulation. In approving the reasonableness of
the use of the <FONT STYLE="white-space:nowrap">year-end</FONT> rate base in Docket No.&nbsp;2011-00092, the Commission noted that the global stipulation included a downward adjustment to rate base and was part of a resolution which addressed
overall revenue requirements. <I>2011- 00092 </I>Order at 7. Thus, while a <FONT STYLE="white-space:nowrap">year-end</FONT> rate base may be reasonable to include as part of a stipulation resolving other revenue requirement issues, the
Commission&#146;s decision in Docket No.&nbsp;2011-000092 does not contradict the holding in <I>Bangor Gas, </I>nor dictate that the Commission use a <FONT STYLE="white-space:nowrap">year-end</FONT> rate base in deciding this litigated case. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Because there is no suitable proposal in the record which would match Northern&#146;s <FONT STYLE="white-space:nowrap">year-end</FONT> rate
base with known and measurable revenue increases, the Commission rejects the Company&#146;s proposed use of a <FONT STYLE="white-space:nowrap">year-end</FONT> rate base. Instead, in accordance with the holding in <I>Bangor Gas </I>and past practice,
the Commission will utilize a <FONT STYLE="white-space:nowrap">13-month</FONT> average rate base based on the information provided by the Company in EXM
<FONT STYLE="white-space:nowrap">013-002.</FONT><SUP STYLE="font-size:85%; vertical-align:top">7</SUP> </P> <P STYLE="line-height:8.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000;width:10%">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><SUP STYLE="font-size:85%; vertical-align:top">7</SUP>&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">For reasons described below, we make a different determination for the Saco TAB investments. </TD></TR></TABLE>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-17-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>

<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">B.</TD>
<TD ALIGN="left" VALIGN="top"><U>Gain on Sale of Forest Avenue Property</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In 2015, Northern sold its Forest Avenue
property in Portland. Northern received $1,374,285 in proceeds for this property, which had a net book value of $313,243. Northern also incurred a cost of removal of $43,838 which it charged against accumulated depreciation. This resulted in a net
gain of $922,110. Northern recorded this gain in Account 421.1, Gain on Disposition of Property. <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">ODR-003-024.</FONT></FONT> Northern&#146;s accounting results in the gain not being
reflected in the rate calculation. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">1.</TD>
<TD ALIGN="left" VALIGN="top"><U>Positions Before the Commission</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">As part of his direct testimony, the OPA&#146;s witness
Mr.&nbsp;Morgan recommended that revenue requirements in this case be adjusted for the gain on the sale of the Forest Avenue property. Morgan Dir. Test at 11<I>. </I>Mr.&nbsp;Morgan noted that the Company retained the gain on the sale of the
property located on Forest Avenue in Portland while including the entire cost of the replacement property in rate base. Mr.&nbsp;Morgan recommended that the gain be flowed back to ratepayers through a three-year amortization. Mr.&nbsp;Morgan
reasoned that Northern&#146;s ratepayers were responsible for the depreciation costs associated with this property, have paid investors a return on their investment in the property while it was owned by the Company, and bore the risk of loss when
sold. In its brief, the OPA argues that as a matter of fairness, ratepayers should receive the gain associated with the sale of the Forest Avenue property noting that if the Company is allowed to retain this gain, and treat it as being reinvested in
capital additions as the Company argues it has done, ratepayers will: (1)&nbsp;not only never receive the benefit of the sale in return for the burden they bore in relation to this property; but (2)&nbsp;once those additions are completed, they will
be required to pay a recovery of those new costs through depreciation as well as a return on such costs. To avoid this situation, the OPA now proposes that the gain be flowed back to ratepayers over a four-year period. The OPA also states that the
flow back of this gain should also include a recognition of the regulatory liability and deferred taxes in rate base as recommended in the Staff Bench Analysis. OPA Brief at <FONT STYLE="white-space:nowrap">9-10.</FONT> </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In the Bench Analysis, Staff recommended that Northern create a regulatory liability for the gain on the sale of the property and that the
gain be flowed back to ratepayers through an annual amortization over a four-year period. Staff also recommended that the regulatory asset, after appropriate reductions for depreciation and deferred taxes, be used to reduce rate base. Specifically,
a regulatory liability of $922,110 should be recorded in Account 254, Other Regulatory Liabilities, to be amortized over a four-year period to Account 407.3, Regulatory Debits. The Staff also recommended that a deferred tax debit of $367,830 should
also be recorded. ($922,110 x 39.89% Statutory Tax Rate). Bench Analysis at 2. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Company disagrees with the position of the Staff and
the OPA stating that the recommendations are inconsistent with sound ratemaking principles.&nbsp;&nbsp;&nbsp;&nbsp;Northern argues that because the transaction happened in 2014, the gain is outside of the 2016 test year, and that any related
operating costs are not reflected in the 2016 test year. Northern Brief at 12. Northern also states that the asset was not fully depreciated and </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-18-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
opines that the &#147;return on&#148; an asset reflects the recovery of the financing costs of an asset. Northern goes on to state that the &#147;gain&#148; on the sale of the Forest Avenue
property was simply an accounting recognition, consistent with the requirements of the FERC Uniform System of Accounts, which the Company reflected in its financial statements for one period only. Northern did not &#147;retain&#148; the gain for the
benefit of the shareholders, rather it reinvested the proceeds in its distribution system for the benefit of ratepayers. Northern further states that in addition to receiving the benefit of an improved distribution system, ratepayers also avoided
payment of any costs that the Company would incur if it were to borrow an equivalent amount of money to invest in its system. <I>Id. </I>at 13. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Northern argues that the Staff and the OPA&#146;s proposed ratemaking treatment could result in Northern returning more to ratepayers than the
gain it actually received from the sale. <I>Id </I>at <FONT STYLE="white-space:nowrap">12-15.</FONT> Thus, Northern requests that if the Commission agrees with the Staff and OPA positions, then the amortization should be accomplished through an
annual reconciliation mechanism. <I>Id </I>at 16. Finally, to the extent the Commission adopts the amortization proposal of the Staff and the OPA, Northern suggests the Commission should follow past precedent outlined in <I>Central Maine Power
Company, Annual Price Change Pursuant to the Alternative Rate Plan</I>, Docket <FONT STYLE="white-space:nowrap">No.&nbsp;99-00155,</FONT> Order on CMP&#146;s Motion for Reconsideration (Jan. 20, 2000) and allocate, at a minimum, ten percent of the
gain to the Company. <I>Id</I>. at 17. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">2.</TD>
<TD ALIGN="left" VALIGN="top"><U>Decision</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In <I>Casco Bay Lines v. Public Utilities Commission, </I>390 A.2d 483 (Me.
1978), the Law Court affirmed the Commission&#146;s 90% allocation to ratepayers and 10% allocation to shareholders of the gain on the sale of three vessels. The Commission spread the net gain over a period of three years. Although the Commission
acknowledged that ratepayers should primarily receive the benefits from the sale of depreciable assets, the Commission concluded that shareholders should retain 10% of the gain in order to maintain an incentive for the utility to achieve the best
possible purchase price. The Law Court affirmed the Commission&#146;s decision, stating: </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman">It is entirely reasonable to redistribute those
excessive depreciation payments back to the ratepayers by means of future reductions in Casco&#146;s depreciation expense. Furthermore, we note that when a utility sells property at a loss it is generally allowed to amortize such loss as an expense
to be recovered from its ratepayers. It is only equitable that ratepayers who bear the cost of depreciation and maintenance on the property should be entitled to benefit from the sale of such property at a gain. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><I>Id</I>. at 489 &#150; 490 (citations omitted). </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In <I>Central Maine Power Company&#146;s Annual Price Change Pursuant to the Alternative Rate Plan, </I>Docket No.&nbsp;1999-00155, Order on
Issue of Proceeds from Sales </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-19-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
of CMP Easements to Gas Pipeline Companies (Aug. 2, 1999) (<I>CMP</I>), the Commission extended this analysis to include <FONT STYLE="white-space:nowrap">non-depreciable</FONT> as well as
depreciable property since ratepayers bear the risk of loss on <FONT STYLE="white-space:nowrap">non-depreciable</FONT> as well as depreciable property. <I>CMP </I>at 10. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In this instance, Northern&#146;s ratepayers have paid the depreciation expense associated with the Forest Avenue property and have borne the
risk of loss when sold. Ratepayers have also provided investors with a return on investment throughout the period that the property was owned by Northern. As the Commission has noted previously, since investors are not entitled to a return on the
fair value of rate base, they &#147;do not possess a vested right in value-appreciations accruing to <FONT STYLE="white-space:nowrap">in-service</FONT> assets.&#148; Id. at 10. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Commission agrees that the sale took place outside of the test year but does not find that fact relevant in the determination of whether
ratepayers should benefit from the gain. The Company has control over the test year and, to some degree, when the sale is recognized. This is shown clearly by the fact that the sale took place in 2014 and was not recognized on Northern&#146;s books
until 2015. Transactions related to plant and plant adjustments are recognized on the balance sheet on a utility&#146;s books at original cost and remain there until either retired or sold whereas operating expenses are recorded in the current year
only and reflected as part of the income statement. Utilities frequently are allowed by regulators to take costs that are either extraordinary in type or dollar level that accounting rules would require being expensed in one year and defer those
costs for future recovery even though those expenses were not incurred &#147;during the test year&#148;. <I>Public Utilities Commission, Investigation of Stranded Cost Recovery, Transmission and Distribution Utility Revenue Requirements, and Rate
Design of Bangor Hydro-Electric Company, </I>Docket No.&nbsp;1997-00596, Accounting Order at 5 (Sept. 8, 1999). The sale of an asset such as the Forest Avenue Property is not a usual transaction for a utility and, therefore, warrants special
treatment, similar to that of an extraordinary gain. While Northern had information regarding the transaction back in 2014, the Commission did not. Had the Commission been informed of the sale at the time, it could have ordered the deferral of the
gain through an accounting order until specific treatment was decided during a full rate proceeding. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Northern cites FERC accounting rules
as directing the accounting for the sale of the gain. The Commission notes, however, that FERC accounting rules allow for the recording of regulatory assets and liabilities in those instances where ratemaking and accounting are inconsistent.
Moreover, in <I>CMP, </I>the Commission, quoting <I>Democratic Central Committee v Washington Metropolitan Transit District, </I>485 F. 2d 786, 821 (D.C. Cir. 1973), noted: </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman">Accounting procedures are not self-justifying; like other regulatory action of the commission, they must reflect a rational allocation of
economic rights and responsibilities between a utility&#146;s investors and consumers. The simple fact that an agency treats an item a certain way for purposes of </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-20-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman">
uniform system of accounts does not mark the end of judicial scrutiny; on the contrary, a reviewing court must assure itself that the accounting practice prescribed is consistent with underlying
substantive principles of public utility law. To permit an accounting device to dictate the rule of law is to allow the tail to wag the dog. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Id.
</I>at <FONT STYLE="white-space:nowrap">6-7.</FONT> </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Northern&#146;s argument that the property had not been fully depreciated is not
relevant as the gain is calculated using the net book value which reduces the amount to be returned to ratepayers. Therefore, the Company has recovered the undepreciated amounts through the sale of the property. The Company&#146;s statement that the
&#147;gain is simply an accounting recognition&#148; is without merit. If the Commission were to take Northern&#146;s statement to its broadest application, it could determine that everything was &#147;simply an accounting recognition&#148; as the
accounting records are the basis and support for the rate proceeding and not allow anything in rates. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Commission also does not find
validity in the Company&#146;s statements that characterize this transaction as essentially a refinancing or the financing of replacement assets. Northern could have treated the proceeds similar to a Contribution in Aid of Construction and reduced
the value of the assets by the gain. That would have in turn reduced the asset balance that Northern&#146;s depreciates and calculates a return on which would have allowed ratepayers to receive the benefit of the gain. This did not happen, however.
It is not clear what Northern did with the cash from the sale. To the extent the Company reinvested the cash in property, its books reflect such investment as shareholder and not ratepayer investment. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Northern also takes exception to the Staff and OPA&#146;s proposal that the gain be returned to ratepayers over a four-year period with the
amortization reflected in the cost of service with a reduction in rate base for the regulatory liability, net of the appropriate deferred taxes. Northern takes the position that by doing this, unless it files another rate proceeding, more than the
gain would be returned to ratepayers. The Commission notes that rates are set with rate base at a point in time and after that point, the Company continues to depreciate property but earns a return based on the book value of the property at the time
rates were set. There is no ongoing reconciliation to reflect the continued change in book value. The Commission sees no difference between the treatment of the regulatory liability and the treatment of other assets on the Company&#146;s books. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Lastly, Northern states that the Commission should follow previous precedent and allow it to keep at a minimum 10% of the gain as an incentive
to ensure the Company works to get the best possible gain for ratepayers. Consistent with our holding in <I>CMP. </I>the Commission agrees that Northern should be allowed to keep 10% of the gain as an incentive to act in ratepayers&#146; greatest
interest in the future<B>.</B> </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-21-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In conclusion, the Commission determines that Northern should return 90% of the gain on the sale
of the Forest Avenue property in Portland to ratepayers by recording a regulatory liability on its books to be amortized over a four-year period. To reflect the fact that the liability will begin to be amortized in the rate-effective year, the
liability should be reduced by <FONT STYLE="white-space:nowrap">one-half-year&#146;s</FONT> amortization. The rate base reduction should also be offset by the appropriate amount of deferred taxes. </P>
<P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">C.</TD>
<TD ALIGN="left" VALIGN="top"><U>Depreciation Expense</U> </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">1.</TD>
<TD ALIGN="left" VALIGN="top"><U>Positions Before the Commission</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">As part of its direct case in this matter, Northern
filed a depreciation study prepared by Paul Normand and proposed new depreciation rates and revenue requirement changes as a result of the proposed new depreciation rates. On an overall basis, the Company proposes a $590,286 increase in its annual
accruals. Normand Dir. Test. at 11. The Staff retained the services of William Dunkel, a utility depreciation rate consultant, to review and analyze Mr.&nbsp;Normand&#146;s study and analysis. As part of its Bench Analysis, the Staff submitted the
Bench Report of William Dunkel. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In his Bench Report, Mr.&nbsp;Dunkel challenges the Company&#146;s proposed accruals in the following
three different accounts: Account <FONT STYLE="white-space:nowrap">376.20-Mains</FONT> Coated/Wrapped; Account <FONT STYLE="white-space:nowrap">380.00-Services;</FONT> and Account <FONT STYLE="white-space:nowrap">376.40-Mains</FONT> Plastic. On an
overall basis, Mr.&nbsp;Dunkel recommended a $1,224,768 reduction to Company&#146;s proposed accrual. The primary driver in this difference was the different net salvage factors for all three accounts. In addition, Mr.&nbsp;Dunkel recommended a
change in the average service life for account 376.40 which produced a $241,199 accrual reduction. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The largest adjustment ($942,242)
proposed by Mr.&nbsp;Dunkel related to Account <FONT STYLE="white-space:nowrap">380-Services.</FONT> With regard to this account, Mr.&nbsp;Dunkel notes that actual average annual net salvage costs during the 2014-2016 period have been $516,393.
Dunkel Bench Report at 14. Mr.&nbsp;Dunkel also used a three-year average, based on booked costs, to calculate the annual salvage costs for Account 376.40 Plastic and Account 376.20 Mains-Coated/Wrapped. In order to be conservative, Mr.&nbsp;Dunkel
adjusted the salvage costs up by a ratio of 1.8 in the case of services, and by 1.7 in the case of Mains- Plastic. Figure V.5 below presents a summary of Mr.&nbsp;Dunkel&#146;s net salvage accrual proposals compared to those presented by the
Company. </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-22-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Figure V.5 </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="5%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="62%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="10" ALIGN="center"><B>Net Salvage &#150; Annual Amounts</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD COLSPAN="2" VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD COLSPAN="2" VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD COLSPAN="2" VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD COLSPAN="2" VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" NOWRAP ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">Three-Year<BR>Average<BR>Booked<BR>Incurred</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" NOWRAP ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">Company<BR>Proposed<BR>Accrual</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" NOWRAP ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">Ratio:<BR>Company<BR>Proposed<BR>Accrual/<BR>Incurred</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD COLSPAN="2" VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" STYLE=" BORDER-RIGHT:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD COLSPAN="2" VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" NOWRAP ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">Bench&nbsp;Report<BR>Proposed<BR>Accrual</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" NOWRAP ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">Ratio:<BR>Bench<BR>Report<BR>Proposed<BR>Accrual/<BR>Incurred</TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>


<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B><U>Total All Account:</U></B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,341,243</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">2,776,306</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">2.1</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,971,647</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1.5</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">376.20</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">Mains-Coated/Wrapped</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">179,169</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">122,568</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.7</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">184,617</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1.0</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">376.40</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">Mains-Plastic</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">225,608</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">540,775</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">2.4</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">392,400</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1.7</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">380.00</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">Services</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">516,393</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,771,416</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">3.4</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">928,211</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1.8</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Source: Dunkel Bench Report at 16. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In addition to recommending changes to the Company&#146;s accrual rates based on net salvage, Mr.&nbsp;Dunkel proposed a change in the Average
Service Life (ASL) for Account 376.40, Mains-Plastic. For this account, the Company proposed an ASL of 55 years. According to Mr.&nbsp;Dunkel, however, the Company data indicate a longer life. Specifically, in the Company&#146;s simulated Plant
Balance Analysis <FONT STYLE="white-space:nowrap">(SPR-BAL)</FONT> the four best fits to the actual plant balances had an ASL of 67 years or higher. The best fit to the actual data (best Conformance Index) with a Retirement Experience Index that is
at least &#147;Fair&#148;, was 67 years. Mr.&nbsp;Dunkel thus recommended an ASL of 60 years for Account 376.40. In dollar terms, the increase in the ASL for this account reduced the Company&#146;s accruals by $241,199. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Mr.&nbsp;Normand, on behalf of the Company, responded to Mr.&nbsp;Dunkel&#146;s recommendations by way of his Rebuttal Testimony filed on
November&nbsp;13, 2017. Mr.&nbsp;Normand testified that Mr.&nbsp;Dunkel&#146;s recommendation on the higher ASL was not reasonable because Mr.&nbsp;Dunkel relied on the Conformance Index and ignored the Retirement Index. According to
Mr.&nbsp;Normand, the authority on these issues, Mr. Baughan, requires that the Retirement Index be at least Good (above 50%) and the Retirement Index for Mr.&nbsp;Dunkel&#146;s life curve was only Fair. Therefore, Mr.&nbsp;Dunkel&#146;s
recommendation should be disregarded. Normand Reb. Test. at <FONT STYLE="white-space:nowrap">8,6-9.</FONT> In contrast, Mr.&nbsp;Normand notes that his ASL curve satisfied Mr.&nbsp;Baughan&#146;s requirements. <I>Id.</I> </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">With regard to Mr.&nbsp;Dunkel&#146;s net salvage recommendations, Mr.&nbsp;Normand testified that Mr.&nbsp;Dunkel&#146;s recommendations use
data from <FONT STYLE="white-space:nowrap">non-related</FONT> utilities and thus, are arbitrary and not supported by NARUC or any other authoritative source. Mr.&nbsp;Normand goes on to testify that Mr.&nbsp;Dunkel&#146;s recommendations have no
company-specific support and appear to be designed solely to establish an adjustment to reduce the </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-23-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
Company&#146;s costs. <I>Id</I>. at <FONT STYLE="white-space:nowrap">10-11.</FONT> Finally, Mr.&nbsp;Normand criticizes Mr.&nbsp;Dunkel&#146;s use of historical three-year averages of salvage
costs since it ignores the lag that it takes to get such costs approved in rates and the fact that such costs are constantly increasing over time. <I>Id </I>at 13. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In his Reply Bench Report filed on December&nbsp;5, 2017, Mr.&nbsp;Dunkel responded to Mr.&nbsp;Normand&#146;s testimony by stating that he
did not in fact rely on data from other companies as part of his analysis here. While Mr.&nbsp;Dunkel notes that he did make reference to his methodology being used by other companies, this is wholly different than relying on data from those
companies. Dunkel Reply Bench Report at <FONT STYLE="white-space:nowrap">2-7.</FONT> </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">2.</TD>
<TD ALIGN="left" VALIGN="top"><U>Decision</U> </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="13%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">a.</TD>
<TD ALIGN="left" VALIGN="top"><U>Average Service Lives</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Mr.&nbsp;Dunkel proposed changes to the ASL for only one account,
thus, there is only one ASL calculation in dispute in this case, Account <FONT STYLE="white-space:nowrap">376.40-Mains-Plastic.</FONT> Both Mr. Normand and Mr.&nbsp;Dunkel utilize the standard Iowa Curves ASL methodology to determine the ASL for
this account. The curve selected by Mr.&nbsp;Normand results in his recommendation of 55 years, while the curve selected by Mr.&nbsp;Dunkel yielded a service life of 67 years and led to his recommendation of a
<FONT STYLE="white-space:nowrap">60-year</FONT> service life. Both Mr. Normand and Mr.&nbsp;Dunkel rely on the article by Alex Baughan as the authoritative source on the use and selection of ASL curves in utility depreciation calculations.<SUP
STYLE="font-size:85%; vertical-align:top">8</SUP> The threshold question before us is whether Mr.&nbsp;Dunkel&#146;s analysis and recommendation satisfies the criteria set forth by Mr.&nbsp;Baughan. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">According to the Baughan criteria, in order for the life curve selected to be considered entirely satisfactory, it should be required that
both the retirement experience index and the conformance index be &#147;Good&#148; or better. If the retirements experience index is &#147;Poor&#148; or &#147;Valueless&#148;, the result should not be accepted even if the conformance index is. In
those cases, where the retirement experience index is &#147;Fair&#148;, the life determination should be &#147;examined critically and if it is not supported by reasoned judgment, it should be accordingly modified.&#148; Baughan at <FONT
STYLE="white-space:nowrap">62-63.</FONT> According to Baughan, the conformance index is considered to be &#147;Excellent&#148; if it is over 75 and &#147;Good&#148; if it is between 50 and 75. Retirement index results are considered
&#147;Excellent&#148; if they are over 75, &#147;Good&#148; between 50 and 75, &#147;Fair&#148; from 33 to 50. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The life determination
curve selected by Mr.&nbsp;Dunkel had a conformance index score of 184, in the &#147;Excellent&#148; range, and a retirement index of 35 or &#147;Fair&#148;. Under the Baughan criteria then, Mr.&nbsp;Dunkel&#146;s results do not need to be rejected
outright. However, in comparing Mr.&nbsp;Dunkel&#146;s ASL recommendation to Mr.&nbsp;Normand&#146;s recommendation, we believe the Normand recommendation to be superior here. </P>
<P STYLE="line-height:8.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000;width:10%">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><SUP STYLE="font-size:85%; vertical-align:top">8</SUP>&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"><I>See </I>Life Analysis of Utility Plant for Depreciation Accounting Purposes by the Simulated Plant-Record Method, Alex E. Baughan (Dunkel Bench Report, Attachment <FONT STYLE="white-space:nowrap">WDA-5)</FONT>
(Baughan). </TD></TR></TABLE>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-24-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The ASL curve selected by Mr.&nbsp;Normand produced a conformance index score in the
&#147;Excellent&#148; range and a retirement index score in the &#147;Good&#148; range. Therefore, according to the Baughan criteria, Mr.&nbsp;Normand&#146;s recommended ASL would be considered &#147;entirely satisfactory&#148;. Thus, while
Baughan&#146;s criteria does not require that we reject Mr.&nbsp;Dunkel&#146;s result, the Commission finds that Normand&#146;s proposed ASL selected curve produces superior results and, therefore, will accept the Company&#146;s recommendation here.
</P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="13%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">b.</TD>
<TD ALIGN="left" VALIGN="top"><U>Net Salvage</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Gross salvage value refers to the value that is received for plant when it
is retired from service. Cost of removal is the expenditure incurred in connection with retiring, removing and disposing of property when it is retired. Historically, net salvage value has been reflected in utility depreciation rates. The underlying
rationale for doing so is to match costs with the utility ratepayers who benefit from the investment. Public Utility Depreciation Practices, NARUC (August 1996) at 157. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">While easily stated in theory, accurately calculating net salvage costs in practice is not an easy task. This is because the calculation is
based on forecasts of costs that will occur years into the future. Indeed, this difficulty has led a number of utility commissions to abandon the practice of incorporating net salvage costs into depreciation rates and to move to current-period
accounting for the recovery of net salvage values. The move to current-period accounting, apparently, has been accelerated by the fact that generally, at this time, cost of removal exceeds gross salvage resulting in negative net salvage values.
<I>Id. </I>at 158. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Commission in this case has been presented with two methodologies for calculating net salvage. The methodology
employed by the Company&#146;s witness, Mr.&nbsp;Normand, derives net salvage by calculating the net salvage percentage by dividing recent historical removal costs by the original cost of the plant when placed in service. Mr.&nbsp;Normand then
applied judgement in adjusting these values down to what he considers to be conservative. Tr. at <FONT STYLE="white-space:nowrap">13-14</FONT> (Nov. 13, 2017). Mr.&nbsp;Normand&#146;s approach has been referred to in this case as the
&#147;traditional&#148; approach. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">An &#147;alternative&#148; approach for calculating net salvage for three accounts (Distribution
Services, Mains-Plastic and Mains-Coated/Wrapped) has been presented by Mr.&nbsp;Dunkel on behalf of the Commission Staff. To calculate net salvage for these three accounts, Mr.&nbsp;Dunkel took the most recent three-year average of removal and then
adjusted the average up by a ratio of 1.8 in the case of Services and 1.7 in the case of Mains-Plastic. In the case of Mains-Coated/wrapped Mr.&nbsp;Dunkel essentially used the three-year average. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In comparing the two methodologies presented here, both Mr.&nbsp;Normand and Mr.&nbsp;Dunkel looked at recent historical data and used these
results to project the future cost of removal. The Company argues that the NARUC manual states the &#147;the process should start&#148; by looking at historical data and that instead of just starting there, Mr. Dunkel
</P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-25-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
also finished there. Northern Brief at 63. In contrast, Mr.&nbsp;Normand used this historical data and looked at the relationship between salvage costs and plant by dividing salvage costs by the
original cost of the retired plant, which is consistent with the methodology set forth in the NARUC manual. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Commission agrees with
the Company that Mr.&nbsp;Normand&#146;s methodology is consistent with the NARUC manual. We also conclude, however, that this approach is not mandated or directed by the manual. Indeed Mr.&nbsp;Normand acknowledged that there are a number of ways
that salvage value can be calculated. Tr. at 10 (Dec. 13, 2017). </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In looking critically at Mr.&nbsp;Normand&#146;s methodology, our
concern is the mismatch which results from deriving a salvage ratio based on costs of removal from today and plant investment costs from decades ago. This results in salvage ratios which are many times higher than the ratios that would result from
using current levels of plant investment and current accruals. Mr.&nbsp;Normand, himself, recognized the mismatch and addresses the issue by ratcheting the number down based on his judgment. Tr. at <FONT STYLE="white-space:nowrap">13-</FONT> 14
(Dec. 13, 2017). In looking at the Services account, the average service life for this asset is 50 years. Assuming the asset retired in 2016 had an &#147;average life&#148;, the dollar invested in 1966 for the asset was approximately 1/7 of the
value of the dollar that was spent for removal. <I>Id</I>. at <FONT STYLE="white-space:nowrap">35-36.</FONT> </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In contrast to
Mr.&nbsp;Normand&#146;s approach, Mr.&nbsp;Dunkel relied solely on the current level of removal costs. The Company argues that by looking solely at current removal costs and not tying such costs to the Company&#146;s investments, there is no basis
to determine what future costs of removal should be recovered from today&#146;s ratepayers. The Commission finds the concern that Mr.&nbsp;Dunkel&#146;s methodology understates the future cost of removal to have validity. Mr.&nbsp;Dunkel addresses
this concern by using his judgment and adjusting cost of removal numbers up to reflect the impact of inflation on future costs of removal. Reply Bench Report at <FONT STYLE="white-space:nowrap">8-9.</FONT> For example, with regard to the Services
account, as noted previously, the three-year average for the cost of removal was $516,393. Mr.&nbsp;Dunkel adjusts this number up by approximately 80% to $928,211. In looking at both of the analyses before us, then, both Mr.&nbsp;Normand and
Mr.&nbsp;Dunkel applied their judgment to their base calculations which would otherwise be invalid or unacceptable. Ultimately, the Commission must apply its judgment and decide what is just and reasonable to the Company&#146;s ratepayers, both
present and future, and the Company&#146;s shareholders. In doing so, the Commission is cognizant of the Company&#146;s current investments and costs of removal resulting from prior owners&#146; failure to invest which suggests that, to some extent,
the current costs of removal may be relatively higher than might be expected in future years. The Commission, therefore, will adopt Mr.&nbsp;Dunkel&#146;s net salvage recommendations for accounts 376.20, 376.40, and 380, finding that
Mr.&nbsp;Dunkel&#146;s methodology, given current circumstances, will both ensure that the Company is compensated for its actual net salvage costs over the coming years and that current ratepayers are not unnecessarily burdened with forecasts of
costs related to past failures to invest and which have been discontinued. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In accepting Mr.&nbsp;Dunkel&#146;s recommendations here, the
Commission notes that the </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-26-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
Company argued that Mr.&nbsp;Dunkel had not in fact based his net salvage cost calculations on Company data. Normand Reb. Test. at 11. The Company, however, walked back from this claim both in
discovery and at the hearing. EXM <FONT STYLE="white-space:nowrap">012-004</FONT> and Tr. 9 (Dec. 13, 2017). To the extent that the Company is still alleging such, the Commission&#146;s review of Mr.&nbsp;Dunkel&#146;s Bench Report and Reply Bench
Report demonstrates the contrary. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Finally, the Commission notes the Company&#146;s argument that Mr.&nbsp;Dunkel&#146;s methodology has
been rejected in other jurisdictions. <SUP STYLE="font-size:85%; vertical-align:top">9</SUP> The Company is correct in its assertion, but Mr.&nbsp;Dunkel&#146;s methodology has also been accepted elsewhere.<SUP
STYLE="font-size:85%; vertical-align:top">10</SUP> The Company argues that the decisions that have accepted Mr.&nbsp;Dunkel&#146;s Methodology have involved electric utilities and not gas utilities. The Commission notes that the NARUC Manual makes
no distinction between gas utilities and electric utilities in the calculation of net salvage values. Nor has the Company provided any statistical analysis or data in support of its position here. Therefore, the Commission finds no reason to disrupt
its findings and conclusions set forth above based on the decisions in other jurisdictions. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">D.</TD>
<TD ALIGN="left" VALIGN="top"><U>Expense</U> </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">1.</TD>
<TD ALIGN="left" VALIGN="top"><U>Payroll Expenses</U> </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="13%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">a.</TD>
<TD ALIGN="left" VALIGN="top"><U>Inclusion of Incentive Compensation in the Calculation of Payroll Adjustment</U> </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="17%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">i.</TD>
<TD ALIGN="left" VALIGN="top"><U>Positions Before the Commission</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The OPA states that Northern has improperly inflated
payroll expense by applying its annual merit increases to the total payroll amount, including incentive compensation. The OPA argues that the effect of doing so increases the incentive compensation as if it were increased annually by merit rather
than being dependent on actually being earned. OPA Brief at <FONT STYLE="white-space:nowrap">15-16.</FONT> The OPA goes on to state that in order for incentive compensation to effectively be extra compensation it must be awarded based on performance
and not as part of base pay and, therefore, should not be increased by merit pay. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Northern asserts that the OPA misunderstands the way in
which the Company determines incentive compensation. Northern Brief at 21. The Company explains that awarded incentive compensation is calculated as a percentage of base pay and is, therefore, effectively subject to a merit increase each year. For
example, the merit increases that took effect on January&nbsp;1, 2016 were included in the base pay earnings on which the 2017 incentive compensation payout for 2016 performance was based. </P>
<P STYLE="line-height:8.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000;width:10%">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><SUP STYLE="font-size:85%; vertical-align:top">9</SUP>&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"><I>See In re Consumers Energy Company, </I>Michigan Public Service Commission, Case NO. <FONT STYLE="white-space:nowrap">U-15629</FONT> Opinion (Sept. 29, 2009). </TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><SUP STYLE="font-size:85%; vertical-align:top">10</SUP>&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"><I>See NSTAR and Western Massachusetts Electric Company, Petition for Approval of General Increases in Base Distribution Rates, </I>D.PU. <FONT STYLE="white-space:nowrap">17-05,</FONT> Order Establishing
Eversource&#146;s Revenue Requirement (Nov. 30, 2017). </TD></TR></TABLE>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-27-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
Similarly, the merit increases that took effect on January&nbsp;1, 2017 will be included in the base pay earnings on which the 2018 incentive compensation payout for 2017 performance will be
based. <I>Id.</I> </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="17%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">ii.</TD>
<TD ALIGN="left" VALIGN="top"><U>Decision</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The incentive plan documents explain that incentive compensation is expressed
as a percentage of the participant&#146;s base salary earned during the performance period. <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">EXM-001-002</FONT></FONT> Attachments 1 &amp; 2. It follows mathematically that if base
salaries increase, the incentive payout would increase at the same payout percentage. The Company has awarded incentive compensation at least at the target level annually since at least 2013. <FONT STYLE="white-space:nowrap"><FONT
STYLE="white-space:nowrap">OPA-004-014.</FONT></FONT> In this case, the Company has made an adjustment to reduce the test year incentive compensation payment to the target level before applying the applicable merit increases. Shaw Dir. Test. at 7.
Given the mechanics of Northern&#146;s calculations, the Commission finds that it is appropriate to include the incentive payment in the calculation of the payroll adjustment as computed by Northern. The recoverability of incentive payments in
general are discussed later in this section. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="13%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">b.</TD>
<TD ALIGN="left" VALIGN="top"><U>Capitalization Ratio</U> </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="17%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">i.</TD>
<TD ALIGN="left" VALIGN="top"><U>Positions Before the Commission</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The OPA recommends that Northern should apply the same
capitalization ratio to both payroll and benefit expenses. OPA Brief at 17. The OPA further proposes that the capitalization percentage for each division be calculated based on a three-year average of 2014, 2015 and 2016. <I>Id</I>. Currently,
Northern calculates one rate for payroll based on actual payroll costs charged to capital projects (50.29&nbsp;percent for Northern and 31.90&nbsp;percent for USC), and a separate rate for benefits based on a
<FONT STYLE="white-space:nowrap">4-year</FONT> average of the time charges (48.91&nbsp;percent for Northern and 34.03&nbsp;percent for USC). The OPA argues that because employees track their time based on the nature of the work and time records are
used to charge their time to capital projects, it is appropriate to use a historical average in calculating the allocation percentage and proposes a <FONT STYLE="white-space:nowrap">3-year</FONT> average. <I>Id</I>. The OPA calculated a
capitalization rate of 50.40&nbsp;percent for Northern and 33.05&nbsp;percent for USC to be applied to both benefits and payroll. <I>Id</I>. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Northern argues that its method for determining the capitalization percentages is properly based on the Company&#146;s experience and
judgment. Northern Brief at 23. The Company states that labor charges for payroll are not significantly volatile, therefore, actual test year charges are most representative. <I>Id</I>. With respect to benefits, Northern argues that the allocation
between capital and expense is best aligned with time spent on projects rather than labor and are subject to greater variability making its <FONT STYLE="white-space:nowrap">4-year</FONT> average most appropriate. <I>Id</I>. It is the Company&#146;s
position that its use of separate capitalization percentages for payroll and benefits is most accurate and that the OPA has not demonstrated that a <FONT STYLE="white-space:nowrap">3-year</FONT> average is more effective than the <FONT
STYLE="white-space:nowrap">4-year</FONT> average currently used by the Company in deriving its benefits capitalization rate. </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-28-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>

<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="17%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">ii.</TD>
<TD ALIGN="left" VALIGN="top"><U>Decision</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Northern explained that the payroll capitalization rate &#147;is derived from
actual time charges for O&amp;M and Construction payroll&#148; and that the benefits rate &#147;is derived from a <FONT STYLE="white-space:nowrap">4-year</FONT> average of the historical payroll data.&#148; <FONT STYLE="white-space:nowrap"><FONT
STYLE="white-space:nowrap">EXM-001-006</FONT></FONT> and <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">EXM-001-007.</FONT></FONT> The Company further explains that the benefits allocation &#147;is aligned with <U>time</U> spent
on projects, rather than labor, and as such is subject to greater variability from year to year [than payroll].&#148; Northern Brief at 23 (Emphasis in original). The Commission does not understand the distinction between &#147;labor&#148; and
&#147;time spent.&#148; Although the Commission does not dispute that benefit costs likely have greater variability from year to year than payroll costs, it is not clear to the Commission how averaging time spent on projects accomplishes the
Company&#146;s apparent objective of smoothing those cost fluctuations. The Commission also does not understand why it is necessary to smooth the fluctuations since the benefit amount capitalized or expensed should be reflective of that variability.
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The OPA proposed a combined adjustment of $133,466 for the removal of incentive payments from the calculation of the merit increase and
its proposed change to capitalization rates. OPA Brief at 17. The OPA did not quantify each adjustment, however, it can be inferred that the adjustment proposed by the OPA related to the change in capitalization rates is less than $133,000. The OPA
did not propose a corresponding increase to rate base, arguing that it is not necessary. The OPA&#146;s adjustment is prospective and is intended to reflect the cost incurred on an ongoing basis. OPA Reply Brief at 6. The Company argues that if the
amount charged to expense is lowered, the Company&#146;s rate base must be increased to match the increase in the amount charged to capital. Northern Brief at 24. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The test year reflects the expenses and rate base using the actual capitalization rates adopted by the Company during the test year and are,
therefore, properly matched. It appears that the change in the capitalization rates would have only a small impact on the revenue requirement and would require a recalculation of the rate base amount. The Commission finds that it is not necessary to
adjust the capitalization rates for the purposes of determining the revenue requirement in this case. However, as explained above, the Commission does not see the benefit of using separate capitalization ratios for payroll and benefits, and
therefore recommends that the Company review its accounting policy and consider applying a single capitalization ratio to both payroll and benefits. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">2.</TD>
<TD ALIGN="left" VALIGN="top"><U>Incentive Compensation</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Northern has included incentive compensation, which it provides
as a part of the total compensation package to employees, as part of its O&amp;M expenses. The Company offers three different incentive plans: Incentive Plan, Management Incentive Plan and a Stock Plan. The Incentive Plan is available to employees
of eligible subsidiaries, including Northern and USC, who are not eligible for the Management Incentive Plan. The Management Incentive Plan is available to designated management employees. The Stock Plan is available to all <FONT
STYLE="white-space:nowrap">non-union</FONT> employees. The accounting for each plan is </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-29-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">similar in that costs are expensed or capitalized based upon where the employees&#146; time is recorded. The
Company included an adjustment to reduce the test year incentive compensation to the payout expected at the target level. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="13%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">a.</TD>
<TD ALIGN="left" VALIGN="top"><U>Position of the Parties</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Staff recommended a $554,655 reduction to O&amp;M expenses for
the incentive compensation related to earnings per share (EPS) and electric reliability standards. Bench Analysis at <FONT STYLE="white-space:nowrap">24-25.</FONT> Staff reasoned that the EPS metric primarily benefited shareholders rather than
ratepayers and, therefore, the cost for incentive payments related to EPS goals should be excluded from the revenue requirement. Similarly, Staff stated that Northern&#146;s Maine gas customers should not bear the cost of incentives paid to achieve
electric reliability standards for other subsidiaries in other jurisdictions. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In calculating the amount of the disallowance, Staff
interpreted the Incentive Plan and Management Incentive Plan as being based on five separate metrics. These metrics included EPS, which made up 40% of the target level payout, and electric reliability which made up an additional 10% of the payout
amount. Staff interpreted the Restricted Stock Plan as being wholly attributable to EPS and, therefore, recommended disallowance of all Restricted Stock Plan incentive payments. In its rebuttal testimony, the Company clarified that the same five
performance metrics used in the other incentive plans are also applicable to the Restricted Stock Plan. Shaw Reb. Test. at 7. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The OPA
made a similar argument as Staff, stating that costs for incentive programs must be adjusted to remove the portion associated with earnings goals or increasing earnings. OPA Brief at 12. The OPA argues that Northern&#146;s assertion that higher
earnings directly benefit ratepayers is nothing more than a description of a financially healthy company that is already required by statute. In addition, the OPA points out that if the Company fails to meet the metrics necessary to award incentive
compensation, the Company will have collected through rates amounts intended for incentives that are not paid to employees, and, therefore, are retained by the Company. In its Brief, the OPA also adopts the Staff&#146;s recommendation to exclude
incentive payments attributable to electric reliability metrics. <I>Id</I>. at 15. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The OPA takes issue with Northern&#146;s argument that
the full incentive compensation amount must be included in the revenue requirement because they are necessary to provide compensation consistent with market levels allowing the Company to attract and retain qualified employees. Northern presented
findings of the Company&#146;s compensation consultant, Towers Watson, which compares Northern&#146;s compensation to those in proxy or peer groups (Towers Watson Study).<SUP STYLE="font-size:85%; vertical-align:top">11</SUP><B> [BEGIN
CONFIDENTIAL]</B>* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * </P> <P STYLE="line-height:8.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000;width:10%">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><SUP STYLE="font-size:85%; vertical-align:top">11</SUP>&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"><I>See </I><FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">EXM-001-001</FONT></FONT> Attachments 1 and 2 (Confidential). </TD></TR></TABLE>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-30-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * ** * * * * * * * * * * * * * * * *[END CONFIDENTIAL] </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Northern asserts that it must be able to pay its employees reasonable market level compensation so that it can meet the Company&#146;s service
obligation to customers and that the Company&#146;s overall compensation, including incentive compensation, is consistent with that objective. Northern Brief at 27. The Company&#146;s position is that the Towers Watson Study demonstrates that its
total compensation is aligned with, or below, the market median. Northern suggests that the Commission should look at the reasonableness of the overall level of compensation and contends that disallowing components of the incentive payment as
recommended by Staff and the OPA effectively penalizes the Company for the way in which it structures is employee compensation. <I>Id. </I>at 28. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In addition, the Company argues that EPS is a comprehensive measure of the financial condition of the Company and, therefore, directly
benefits ratepayers. <I>Id. </I>at 29. Northern reasons that only a financially healthy company can raise capital at a reasonable cost which provides a direct benefit to ratepayers. </P>
<P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="13%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">b.</TD>
<TD ALIGN="left" VALIGN="top"><U>Decision</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The OPA argues that <B>[BEGIN CONFIDENTIAL]</B>* * * * * * * * * * * * * * * *
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * ** * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * <B>[END CONFIDENTIAL] </B>The Commission
considers the Towers Watson Study a reliable source that supports Northern&#146;s position that its overall compensation is in line with the market median and not excessive. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The OPA also asserts that if Northern&#146;s base salary is in line with market levels, that should be sufficient to hire and retain qualified
employees. Northern contends that &#147;[i]f the Company were to pay only base salaries at the median market level, without incentive compensation, it would obviously pay its employees overall compensation at a level well below the market
median.&#148; Northern Reply Brief at 13. The Commission agrees with Northern that it is important to consider the reasonableness of the total compensation, including base pay and incentive compensation, paid to employees. It is not the
Commission&#146;s place to dictate the exact structure of the Company&#146;s overall employee compensation scheme. </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-31-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Commission considered a similar issue concerning incentive compensation in <I>Northern New
England D/B/A Fairpoint d/b/a Consolidated Communications/NNE, Request for Increase in Rates and for Maine Universal Service Fund Support for Provider of Last Resort Service Pertaining to Northern New England D/B/A FairPoint Communications</I>,
Docket 2013-00340, Order at <FONT STYLE="white-space:nowrap">61-63</FONT> (November 21, 2014) (<I>FairPoint Order</I>). In the <I>FairPoint Order</I>, the Commission concluded that there was no evidence that FairPoint&#146;s &#147;overall
compensation levels [were] unreasonable.&#148; <I>FairPoint Order </I>at 63.&nbsp;&nbsp;&nbsp;&nbsp;The Commission declined to make any adjustments to the incentive expense on that basis. <I>Id. </I>Although there may be circumstances under which it
is appropriate to exclude incentive payments, in the present case, the Commission finds that Northern&#146;s incentive compensation is a component of a reasonable overall compensation plan and, therefore, is properly included in the revenue
requirement calculation as adjusted by the Company. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">With regard to the electric reliability metric, Northern asserts that it is weighted
the same as the gas safety metric in the incentive compensation calculation and, therefore, could be replaced with the gas safety metric with no impact to ratepayers. Northern Brief at 31. The Commission is not convinced by this argument. If the
Company&#146;s actual performance results are different in the two metrics, it seems that the impact on the incentive payment calculation would not be identical or offsetting. Nevertheless, because the Commission determined that the overall total
compensation is reasonable, no adjustment for electric reliability is necessary. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In addition, the Commission understands the OPA&#146;s
point that incentive payouts are dependent on the Company meeting established performance goals and, therefore, are not guaranteed. The Company, however, has met its performance metrics and made incentive payments at the target level or above each
year for at least the last four years. <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">OPA-004-014.</FONT></FONT> Therefore, the Commission believes that it is not unreasonable to include the incentive payments. The record lacks
sufficient evidence to support removal of the incentive payments beyond that already made by the Company from the test year expenses on the basis that they may not occur. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">3.</TD>
<TD ALIGN="left" VALIGN="top"><U>Inflation Adjustment</U> </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="13%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">a.</TD>
<TD ALIGN="left" VALIGN="top"><U>Positions Before the Commission</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In its direct case, the Company proposed to adjust
&#147;residual O&amp;M expenses&#148; (all expenses not otherwise adjusted for known and measurable changes or not subject to inflation) by a general inflation rate as measured by changes in the Gross Domestic Product Implicit Price Deflator
(GDPIPD). The Company inflation adjustment is based on a 3.63% cumulative inflation rate which represents the increase in the GDPIPD from the <FONT STYLE="white-space:nowrap">mid-point</FONT> of the test year, July&nbsp;1, 2016, to the date of the
proposed rate change, March&nbsp;1, 2018. The application of the inflation rate to the residual O&amp;M expense category produces an adjustment of $150,416 to revenue requirements. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In the Staff&#146;s Bench Analysis, the Staff took the position that the Company&#146;s proposed inflation adjustment was not a known and
measurable change and was not </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-32-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
appropriate to include as a test year adjustment to O&amp;M expenses. The Staff stated that the adjustment was appropriate as part of an attrition analysis which would include an adjustment for
forecasted sales by the Company. However, the Company did not include an attrition analysis as part of its case here. Bench Analysis at <FONT STYLE="white-space:nowrap">22-13.</FONT> </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In response to the Staff&#146;s position on this issue, the Company argues that there is no question that the Company&#146;s operating and
maintenance expenses will be subject to inflationary pressures. The Company notes that the inclusion of an inflation adjustment is a practice that has long been used by Northern&#146;s affiliates in setting rates. Northern Brief at 18. In support of
this position, the Company cites a Massachusetts case where a Northern subsidiary was allowed to increase its test-year O&amp;M expense by an independently published price index from the <FONT STYLE="white-space:nowrap">mid-point</FONT> of the test
year to the <FONT STYLE="white-space:nowrap">mid-point</FONT> of the rate year. <I>Petition of Fitchburg Gas and Electric Light Company d/b/a Unitil, </I>MA PPU
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">15-80/15-81,</FONT></FONT> Final Order at <FONT STYLE="white-space:nowrap">186-187</FONT> (Apr. 29, 2016) (<I>Fitchburg Gas and Electric)</I>. The Company further argues that the
Company&#146;s use of the historic and projected GDPIPD index is consistent with Maine precedent where the Commission found that the best method to calculate actual inflation was to utilize a government source. <I>Emera Maine, Request for Approval
of Proposed Rate Increase, </I>Docket No.&nbsp;2015-00360, Order &#150; Part II (Dec. 22, 2016). </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In its brief, the OPA argues that the
Company&#146;s proposed inflation adjustment must be rejected because it is not a known and measurable change. Rather, the adjustment is based on the use of an inflation forecasting tool which may produce results that vary from actual levels of
inflation and, thus, are not reasonably certain. Finally, the OPA notes that increasing O&amp;M expenses by an across the board inflation adjustment ignores the reality that Northern&#146;s distribution expenses have decreased since 2015. OPA Brief
at 24. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="13%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">b.</TD>
<TD ALIGN="left" VALIGN="top"><U>Decision</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Commission has in the past distinguished adjustments made as part of an
attrition analysis and known and measurable adjustments to the test year. An attrition analysis is largely based on forecasts and, by its nature, involves a lesser degree of certainty. <I>Bangor Hydro-Electric Company, Proposed Increase In
Rates</I>, Docket <FONT STYLE="white-space:nowrap">No.&nbsp;97-116,</FONT> Order at 21 (Feb. 9., 1998). In contrast, when making test year adjustments, the Commission has applied a strict known and measurable stand. Specifically, to be
&#147;known&#148;, the change to the test year must be reasonably certain as to whether and when it will occur and to be considered &#147;measurable&#148;, the amount of the change must be reasonably certain. <I>Camden and Rockland, Maine and
Wanakah Water Companies, Proposed Increase In Rates, </I>Docket <FONT STYLE="white-space:nowrap">No.&nbsp;93-145,</FONT> Order (Part II) at 9 (July 12, 1994). In the case before the Commission, the Company has not proposed that its rates be adjusted
based on a rate-effective year attrition analysis which would look at forecasts of both expenses and revenues. Based on the arguments presented, the Commission concludes that the Company&#146;s proposed inflation adjustment fails to qualify as a
known and measurable change to test year expenses. </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-33-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Company&#146;s inflation adjustment in this case includes both an historical and projected
component. As such, the changes to the expenses which the Company seeks to adjust here cannot be considered to be known or measurable. The Commission acknowledges that as a general matter, a utility&#146;s costs are subject to inflationary
pressures. The fact that certain costs are subject to inflationary pressures, however, does not necessarily mean that an individual cost or group of costs will increase in lock-step with inflationary changes. Nor does this mean that the Company has
no ability to keep cost increases at a level that is less than the rate of inflation. <I>See Bangor Hydro-Electric Company, Proposed Increase In Rates</I>, Docket No.&nbsp;1993-00062 Order at 51 (Mar. 16, 1994) citing the dissent of Chairman Welch
in <I>Central Maine Power Company Proposed Increase In Rates</I>, Docket No.&nbsp;1992-00345, Order at 146 &#150; 147 (Dec. 14, 1993). The Commission would also note that in the recent Emera Rate Case cited by Northern, the inflation adjustment
utilized by the Commission as part of the attrition analysis included a productivity offset which reduced the annual escalation factor by 1.0% annually. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In response to the Company&#146;s reliance on <I>Fitchburg Gas and Electric, </I>the Commission finds this case law to be inconsistent with
Maine precedent and declines to adopt it here. In addition, under the Massachusetts inflation adjustment procedure, before the Massachusetts Department allows a utility to recover an inflation adjustment, the utility must demonstrate that it has
implemented cost containment measures. As this standard has not been adopted by the Commission, the Company&#146;s inflation adjustment was not measured or judged by this metric. The Commission thus rejects the Company&#146;s proposed inflation
adjustment as a known and measurable change to the test year. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">E.</TD>
<TD ALIGN="left" VALIGN="top"><U>Saco TAB</U> </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">1.</TD>
<TD ALIGN="left" VALIGN="top"><U>Overview</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">On June&nbsp;5, 2015, Northern submitted a Request for Commission Approval of
its Saco TAB Program. Northern described the TAB program as being designed to provide the Company with a mechanism to <FONT STYLE="white-space:nowrap">build-out</FONT> its distribution network incrementally in targeted areas to serve new customers
who are currently off the main line. Northern explained that customers who are off the main line are typically required to pay a contribution in aid of construction (CIAC) up front before Northern can extend the main line and install a new service
for the customer and that the CIAC is a significant barrier to consumers choosing to convert to natural gas. The TAB program would remove the CIAC barrier by replacing it with a monthly surcharge mechanism in specifically defined geographic areas in
the City of Saco. The Company would assess a TAB surcharge to customers within the TAB expansion area for a <FONT STYLE="white-space:nowrap">10-year</FONT> period which is intended to recover the costs of the expansion over time from those customers
that benefit from the expansion. Northern proposed that its TAB program take effect on January&nbsp;1, 2016. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">On December&nbsp;22, 2015,
the Commission issued an Order Approving Stipulation which authorized Northern&#146;s Saco TAB Program. As part of the Order Approving Stipulation, the Commission stated: </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-34-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman">The Commission will allow Northern&#146;s proposed terms and conditions to become effective
January&nbsp;1, 2016, as requested by Northern and the OPA, and as supported by the City of Saco. Nonetheless, in view of the uncertainty as to the projected rate of conversion to natural gas and the discretion afforded Northern in the stipulation
to respond accordingly, the Commission makes no determination regarding the recoverability of <FONT STYLE="white-space:nowrap">TAB-related</FONT> costs in a future base rate case proceeding, leaving that ratemaking issue open for consideration at
the time Northern seeks to include any such costs in base rates. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Northern Utilities d/b/a Unitil, Request for Approval of Rate Targeted Area Buildout
Program</I>, Docket No.&nbsp;2015-00146, Order Approving Stipulation at 5 (Dec. 22, 2015) (Saco <I>TAB Order</I>). </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">2.</TD>
<TD ALIGN="left" VALIGN="top"><U>Positions Before the Commission</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Northern&#146;s initial filing did not contain a
request for recovery of any costs related to the Saco TAB. However, the Company submitted a supplemental filing on August&nbsp;18, 2017, in which it requested that it be allowed to increase its rates by an additional $677,008 for Saco TAB revenue
requirements. As explained by Mr.&nbsp;Chong in his Supplemental Testimony, the Saco TAB plant was gassed and in service by December&nbsp;31, 2016, however, the Saco TAB investment was not closed to plant since the Company was still receiving
invoices from vendors into 2017. Chong Sup. Test. at 2. The Company&#146;s proposed revenue requirement for the Saco TAB was based on a year- end plant investment of $4,132,346; a <FONT STYLE="white-space:nowrap">pre-tax</FONT> return of $488,898
based on its cost of capital recommendation; depreciation expense of $108,025 based on the Company&#146;s proposed depreciation rates; and property tax expense of $80,085 based on the City of Saco&#146;s 2017 property tax rate. <I>Id. </I>at Sched. <FONT
STYLE="white-space:nowrap">DLC-1.</FONT> </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The OPA does not object to the inclusion of the Saco TAB revenue requirement in this rate case
since the Saco TAB plant was operationally in service at the end of the 2016 test year. The OPA does object to the Company&#146;s method of calculating the revenue requirement for the project stating that the Company has failed to take into account
known and measurable changes. The OPA takes the position that in the case of the Saco TAB, it would be inequitable and a violation of the matching principle for the Company to be allowed additional revenue requirement for all capital investment
relating to the buildout without taking into account depreciation, accumulated deferred taxes, and revenues from the surcharges. OPA Brief at <FONT STYLE="white-space:nowrap">25-26.</FONT> </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">OPA witness Mr.&nbsp;Morgan, therefore, suggests several adjustments to the Company&#146;s proposed revenue requirement. Specifically,
Mr.&nbsp;Morgan proposed that the Saco TAB rate base be reduced to reflect surcharge revenues collected in 2017 of $10,058, accumulated depreciation of $107,991, and deferred taxes of $811,502. Mr. </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-35-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
Morgan also proposed that revenues from Saco TAB customers be applied against the TAB revenue requirement. The OPA concludes that the operating revenues related to these customers is known and
measurable and calculated that amount to be $53,964. In proposing these adjustments, Mr.&nbsp;Morgan reasoned that the Saco TAB plant was not recorded as plant in service during the test year and therefore, the Company&#146;s inclusion of the costs
is similar to adding post-test year plant. When adding post-test year revenue producing plant one cannot include only the costs, but must also reflect the revenue requirement and cost offsets. Morgan Dir. Test. at 38. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In its Bench Analysis, Staff agreed with Northern that it was appropriate to address the Saco TAB revenue requirement issues in this case. The
Staff noted that in the Company&#146;s modeling in Docket No.&nbsp;2015-00146 of the TAB rate base level, the Company deducted from gross plant investment amounts for accumulated depreciation, the forecasted TAB surcharge revenue and accumulated
deferred income taxes. In its TAB revenue requirement proposal in this case, however, the Company failed to include any such deductions. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Staff proposed including as an offset to gross plant investment, $788,596 for deferred taxes, including bonus depreciation. In addition,
the Staff reduced the gross plant investment by the TAB surcharge revenue through 2017 which the Staff estimated to be $30,702. Making the adjustments results in a net plant investment of $3,226,055. Bench Analysis Exhibit 4 at 3. Applying the <FONT
STYLE="white-space:nowrap">pre-tax</FONT> WACC of 10.65% proposed by Staff in the Bench Analysis, results in a required return of $343,421 on the Company&#146;s Saco TAB rate base. <I>Id</I>. at 1. Applying the depreciation rates proposed by
Staff&#146;s consultant to the Saco TAB investment reduces annual depreciation expenses from $108,025 to $89,247. <I>Id</I>. at 2. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Staff
noted that the Company included in revenue requirements 2016 end of year plant investment along with 2017 expenses, but excluded entirely the revenue that will be received as a result of this investment and expense. Staff proposed that 2017 Saco TAB
revenue be included as an offset to Saco TAB revenue requirements. The Company estimated 2017 revenue of $142,573. Based on the Staff&#146;s calculations and assumptions, the Staff estimated the revenue deficiency associated with the Saco TAB to be
$362,894. <I>Id</I>. at 1. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">With regards to Saco TAB ratemaking on a going forward basis, the Staff recommended that the Commission adopt
a Saco TAB incentive mechanism to help ensure that the targeted customer and sales growth in the TAB area is achieved. Staff stated that the mechanism would work by establishing targeted levels of sales and surcharge revenues based on the
Company&#146;s modelling in Docket No.&nbsp;2015-00146. In setting the revenue requirement for the Saco TAB in the future, to the extent the Company did not achieve the target sales or surcharge revenue at 90% of the target levels, the deficiency
would be imputed to the Company. On the other hand, if the Company achieved sales or surcharge revenue in excess of 110% of the target, such amounts would flow to the Company. The mechanism would be specific to the buildout areas approved by the
Commission in Docket No.&nbsp;2015-00146. </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-36-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In response to the OPA and Staff proposals on the Saco TAB revenue requirement, the Company
argues that the Saco TAB investment was made during the test year and that no post-test year changes are appropriate. Chong Reb. Test at 24. Specifically, the Company argues that there is no justification to treat the determination of rate base for
the Saco TAB any differently than other rate base additions made during the test year. Northern states that the Saco TAB was operationally in service at the end of 2016, meaning that it was gassed and serving customers before December&nbsp;31, 2016
but due to an accounting lag, it was not closed to the Company&#146;s books until the first quarter of 2017. Northern states that it completed and placed into service $4,132,316 in Saco TAB plant additions in 2016 which resulted in its proposed
revenue requirement of $677,008. Northern Brief at 80. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Northern disagrees that the rate base should be reduced for accumulated
depreciation as the depreciation expense would not have been recorded until 2017 and, therefore, the adjustment is outside of the test year. Northern makes similar points regarding proposed reductions in rate base for 2017 TAB surcharge revenue.
<I>Id. </I>at 81<I>. </I>With regards to the proposed rate base adjustment for accumulated deferred income taxes, Northern states that since it is in a net operating loss (NOL) position, any deferred income taxes would be offset by the deferred NOL
eliminating any rate base reduction. <I>Id. </I>at <FONT STYLE="white-space:nowrap">82-83.</FONT> The Company notes that ADIT represent deductions that the Company has reported on its income tax returns and has received a cash benefit from. The
Company further explains that NOL carryforwards represent deductions that the Company has reported on its income tax returns but due to limitations associated with taxable income, the Company has not received a cash benefit for the deduction. Income
tax and regulatory accounting requires that NOL carryforwards and ADIT be netted against each other to accurately reflect the cash benefit the Company has received for accumulated tax deductions. Because Northern is not currently able to take
advantage of tax savings associated with ADIT the impact of the post-test year adjustment recommended by Staff and the OPA would be zero. In addition, requiring the Company to make the adjustment recommended by Staff and the OPA would effectively
require Northern to be in violation of the Internal Revenue Service (IRS) normalization rules. <I>Id. </I>at 83. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Northern states that it
is not appropriate to reduce the revenue requirement by estimated TAB revenues for 2017 noting that revenues collected in 2017 would also reflect amounts collected from 2017 plant additions, creating a mismatch as 2017 plant additions would not be
reflected in rate base. Offsetting the Saco TAB revenue requirement with future revenues associated with post-test year plant in service will negatively impact the Company&#146;s ability to earn its allowed return on equity. <I>Id. </I>at 84. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Finally, Northern disagrees with Staff&#146;s proposed incentive mechanism. Northern opines that the Saco TAB Order in Docket
No.&nbsp;2015-00146, Order Approving Stipulation (Dec. 22, 2015) (<I>Saco TAB Order</I>), does not contemplate that Northern will be subject to a <FONT STYLE="white-space:nowrap">non-traditional</FONT> ratemaking treatment of unknown design, to be
introduced on a prospective basis at a later time that fundamentally alters the Saco TAB program.&nbsp;&nbsp;&nbsp;&nbsp;It </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-37-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
states that the Stipulation and Order in Docket No.&nbsp;2015-00146 cannot be read to suggest that the Company blindly agreed to and expected an &#147;anything goes&#148; approach to TAB
ratemaking before it proceeded to commit significant resources and investment to a system <FONT STYLE="white-space:nowrap">build-out</FONT> in Saco. Northern believes that the Staff&#146;s proposed Saco TAB incentive mechanism is untimely and unfair
to the Company. Northern states that if the Staff believed that such a mechanism was necessary to allocate risk, it had ample opportunity to do so in both Dockets 2015-00146 and the Company&#146;s Sanford TAB proposal, Docket No.&nbsp;2017-00037.
<I>Id. </I>at 88. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">3.</TD>
<TD ALIGN="left" VALIGN="top"><U>Decision</U> </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="13%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">a.</TD>
<TD ALIGN="left" VALIGN="top"><U>Saco TAB Rate Base</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The arguments before the Commission on the Saco TAB rate base are
essentially identical to those presented regarding the Company&#146;s overall rate base. The Company argues that the Commission should use the <FONT STYLE="white-space:nowrap">year-end</FONT> rate base for its Saco TAB investment and make no
adjustments outside of the test year for known and measurable changes. The Staff and the OPA argue that in order to satisfy the ratemaking matching principle, known and measurable changes, including an adjustment for sales growth related to the
investment, must be made. As discussed in Section V.A<I>.</I>, the Commission&#146;s position on <FONT STYLE="white-space:nowrap">year-end</FONT> rate base is that average-year rate base should be used unless suitable adjustments can be made to
match the costs of the <FONT STYLE="white-space:nowrap">year-end</FONT> adjustment with the known and measurable changes, including sales growth, related to placing those assets into service, associated with the investment. <I>Bangor Gas, </I>at 22.
With regards to the Saco TAB investment, the Commission finds that the information needed to make the necessary corresponding known and measurable adjustments exists in the record, and the Commission, therefore, approves the Company&#146;s proposal
to adjust the end of the test year plant balances for the Saco TAB which had been in CWIP at the end of 2016 but had actually been placed in service. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Staff and the OPA both propose that the Saco TAB rate base be adjusted for the impact of ADIT. Given that the Saco TAB investment was
eligible for bonus depreciation under federal taxation rules, the amount of the ADIT offset in the first year of the investment is significant; approximately $800,000. Bench Analysis Exhibit 4 and Morgan Dir. Test at 40. The Commission agrees with
the Company, however, that because the Company is currently in a NOL position for federal tax purposes, it is unable to take advantage of the ADITs and recognize the cash benefit that a rate base offset is intended to represent. In addition, while
it is uncertain how the IRS would react to a decision of the Commission which began to flow through the benefit of the Saco TAB ADIT at this time, the Commission finds that the Company&#146;s argument that such a flow-through would result in a
finding by the IRS that the Company was in violation of IRS normalization rules to have merit. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="13%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">b.</TD>
<TD ALIGN="left" VALIGN="top"><U>Depreciation Expense</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Company proposes using a full year of depreciation on the Saco
TAB </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-38-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
investment in calculating the Saco TAB revenue requirement. The Company&#146;s depreciation expense is based on Mr.&nbsp;Normand&#146;s proposed depreciation rates. In its Bench Analysis, Staff
proposed that the Saco TAB depreciation expense reflect the recommendations of its consultant, Mr.&nbsp;Dunkel. Both the Staff and the OPA recommend that the Saco TAB rate base be offset with an amount that is included in the revenue requirements
for depreciation expense. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Ordinarily, when investments are added to plant <FONT STYLE="white-space:nowrap">mid-year,</FONT> a half year
of depreciation expense is provided for. However, consistent with the objective of including known and measurable changes associated with the <FONT STYLE="white-space:nowrap">year-end</FONT> Saco TAB investment, the Commission accepts the
Company&#146;s proposal to include a full year of depreciation associated with providing service to Saco TAB customers in 2017. However, the Commission revises the Company&#146;s calculation of the full year depreciation expense consistent with the
depreciation rates proposed by Mr.&nbsp;Dunkel for account 380 (Distribution Services) and as adjusted for account 376.4 (Distribution Mains), as discussed in Section V.C. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="13%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">c.</TD>
<TD ALIGN="left" VALIGN="top"><U>Revenues</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The OPA proposes to include as an offset to the Saco TAB revenue requirement
$53,964 for operating revenue. The OPA&#146;s revenue adjustment is based on Mr.&nbsp;Mierzwa&#146;s calculation of the average annual revenue per customer by class which is then multiplied by the number of TAB customers in each class at the end of
the rate year. The Staff&#146;s proposed revenue adjustment is based on the Company&#146;s estimate of 2017 revenue. As discussed above, the Company opposes both the Staff and the OPA proposals as going beyond the test year. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Company has reported that through July&nbsp;31, 2017, it did not add any distribution mains or services to its 2016 Saco TAB plant. OPA <FONT
STYLE="white-space:nowrap">006-001.</FONT> During the January&nbsp;1, 2017 through July&nbsp;31, 2017 timeframe, the Company&#146;s Saco TAB incremental revenues was $50,108 and the Saco TAB surcharge revenue was $9,070. ODR <FONT
STYLE="white-space:nowrap">008-003.</FONT> Annualizing these amounts by including the months of September through December 2016 results in an adjustment of $58,059 to revenue requirements for TAB revenues and an adjustment of $10,384 for surcharge
revenues. Under the provisions of the Saco TAB, this surcharge revenue should be used as an offset to rate base. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="13%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">d.</TD>
<TD ALIGN="left" VALIGN="top"><U>Incentive Mechanism</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The threshold question in addressing Staff&#146;s incentive
mechanism proposal here is whether it was contemplated that such a proposal might be put forward in this case when we approved the Saco TAB in Docket No.&nbsp;2015-00146. The Company takes the position that the only fair and rational interpretation
of the Commission&#146;s Order approving the Saco TAB is that the Commission intended to look at the costs associated with the Saco TAB investment when the Company sought to include such costs in rates. Northern Brief at 36. The Commission
interprets the Company&#146;s argument essentially to be saying that the Commission reserved the right to conduct a </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-39-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
prudence review of the Company&#146;s TAB investments at the time that the Company proposed to include such amounts in rates. Thus, to the extent that the Commission found the initial Saco TAB
costs were prudent at the time of the investment, Northern&#146;s generally body of ratepayers would be responsible for such costs regardless of whether the Company received revenues to cover the investments. The Commission disagrees that the review
was intended to be this limited. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Under the TAB program, instead of assessing an <FONT STYLE="white-space:nowrap">up-front</FONT> CIAC to
recover the costs of main extensions to serve new customers, such investments are recovered through the assessment of a surcharge which is assessed over a <FONT STYLE="white-space:nowrap">10-year</FONT> time period. By doing so, the Company has
eliminated a significant barrier to expand its footprint and serve new customers. In addition, however, since new customers are no longer paying the upfront charge to recover the investment associated with providing them service, the risk associated
with achieving the sales and penetration rates at the levels projected in the Company&#146;s TAB modeling has been shifted to Northern&#146;s existing customers given that the Saco TAB investment and expenses are included in base rates. In the
<I>Saco TAB Order</I>, the Commission noted that because of the uncertainty about the projected rate of conversion to natural gas and the discretion afforded the Company to respond, the TAB ratemaking issues would be left open until this proceeding.
The Commission was concerned not merely about the costs of the investments, but the uncertainty of sales and how that might impact the recoverability of costs. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Under the Company&#146;s plan for the Saco TAB buildout, investment costs are clearly <FONT STYLE="white-space:nowrap">front-end</FONT>
loaded. As discussed in this section, the Company invested $4,132,346 in 2016. In 2017, the Company projected that it would invest an additional $1,750,445 and in 2018 the Company projects spending an additional $874,090. EXM <FONT
STYLE="white-space:nowrap">004-018.</FONT> After 2018, the Company&#146;s annual investments drop off significantly. <I>See </I>ODR <FONT STYLE="white-space:nowrap">004-007.</FONT> Were the Company&#146;s position to be accepted, Northern&#146;s
ratepayers would bear the significant upfront investment costs and be at risk that the Company&#146;s revenue projections would not be realized. It was precisely this risk that the Commission sought to address when it left open the ratemaking issue
in the <I>Saco Tab Order.</I> </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Under the Staff&#146;s proposed incentive mechanism, Northern&#146;s ratepayers would be at risk for sales
which are between 90% and 110% of projected levels. Outside this deadband, the risk would shift to the Company. The Company complains that the parameters of the Staff&#146;s plan are completely subjective. The Staff has acknowledged that the
bandwidth was based on its judgment of how the risks between ratepayers and shareholders could be reasonably apportioned while accounting for forecast uncertainties. The Commission agrees with the Company that the Staff&#146;s selection of the
sharing criteria was subjective. However, such incentive mechanisms are often based on judgment. <I>See Central Maine Power Company, Proposed Increase In Rates, </I>Docket No. 1992-00345(II), Detailed Opinion and Subsidiary Findings (Jan 10, 1995).
On its face, the mechanism appears to be reasonable. Thus, the Commission will adopt the TAB incentive mechanism proposed by Staff on a going forward basis but we do not preclude the Company from coming back with an alternative proposal to address
the risk allocation issues discussed here. </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-40-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>

<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><B>VI.</B></TD>
<TD ALIGN="left" VALIGN="top"><B>REVENUE ALLOCATION AND RATE DESIGN </B></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">A.</TD>
<TD ALIGN="left" VALIGN="top"><U>Company Proposal</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Figure VI.1 below shows the Company&#146;s proposed class revenue
allocation, based on the Company&#146;s initial filing, which does not include the additional revenue requirement increase of $677,000 proposed in the supplemental testimony of Mr. Chong. The proposal is based on the testimony and cost of service
studies provided by the Company&#146;s consultants and witnesses Mr.&nbsp;Normand and Ms.&nbsp;Gajewski, both of whom are consultants with Management Applications Consulting (MAC). The MAC consultants provided both an accounting cost of service
study (ACOS) and a marginal cost of service study (MCOS). According to the MAC consultants, the cost of service studies indicate that, at current rates, the revenue from the residential classes is substantially deficient and that much higher
increases for these classes as compared to other rate classes is needed in order to meet the target revenue levels. However, to moderate the rate impact on residential customers, the MAC consultants placed a cap on the class revenue increase equal
to 1.25 times the Company&#146;s proposed overall revenue requirement increase. </P> <P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Figure VI.1 </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="92%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="51%"></TD>
<TD VALIGN="bottom" WIDTH="5%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="5%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="5%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="5%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom" COLSPAN="16" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>Increase by Customer Class</B></P></TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom" NOWRAP> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-bottom:1.00pt solid #000000; width:18.20pt; display:inline; font-size:8pt; font-family:Times New Roman; "><B>Class</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>Existing&nbsp;Revenue</B><br><B>[1]</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>Proposed&nbsp;Revenue</B><br><B>[2]</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>$&nbsp;Increase</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>%&nbsp;Increase</B></TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>


<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Residential Heating <FONT STYLE="white-space:nowrap">(R-2)</FONT></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">11,493,243</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">13,485,687</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1,992,444</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">17.34</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Residential <FONT STYLE="white-space:nowrap">Non-Heating</FONT>
<FONT STYLE="white-space:nowrap">(R-1)</FONT></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1,298,049</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1,523,127</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">225,078</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">17.34</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Low Annual, High Winter Use
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">(G-40/T-40)</FONT></FONT></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">9,183,658</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">10,295,549</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1,111,891</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">12.11</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Low Annual, Low Winter Use
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">(G-50/T-50)</FONT></FONT></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">978,814</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1,100,402</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">121,588</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">12.42</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Medium Annual, High Winter
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">Use&nbsp;(G-41/T-41)</FONT></FONT></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">8,618,375</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">9,687,071</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1,068,696</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">12.40</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Medium Annual, Low Winter Use
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">(G-51/T-51)</FONT></FONT></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1,763,399</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1,982,593</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">219,194</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">12.43</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">High Annual, High Winter Use
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">(G-42/T-42)</FONT></FONT></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">5,390,183</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">6,070,902</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">680,719</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">12.63</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">High Annual, Low Winter Use
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">(G-52/T-52)</FONT></FONT></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">4,202,540</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">4,735,667</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">533,127</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">12.69</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">[1]</TD>
<TD ALIGN="left" VALIGN="top">Exhibit <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">DLG/PMN-1G-8,</FONT></FONT> page 2, coulmn R </TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">[2]</TD>
<TD ALIGN="left" VALIGN="top">Exhibit <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">DLG/PMN-1G-8,</FONT></FONT> page 6, coulmn AE </TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Figure VI.2 below shows the average revenue per ccf by rate class at both existing and the Company&#146;s proposed revenue levels, again
without the additional amount presented in the Chong Supplemental Testimony. As Figure VI.2 indicates, residential rates are already substantially higher than medium- and <FONT STYLE="white-space:nowrap">high-use</FONT> commercial/industrial
customers. </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-41-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Figure VI.2 </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="50%"></TD>
<TD VALIGN="bottom" WIDTH="4%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="4%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="4%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="4%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="4%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom" COLSPAN="20" NOWRAP ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>Cost per CCF</B></P></TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom" NOWRAP> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-bottom:1.00pt solid #000000; width:18.20pt; display:inline; font-size:8pt; font-family:Times New Roman; "><B>Class</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>Weather<BR>Normalized&nbsp;CCFs<BR>[1]</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>Existing&nbsp;Revenue</B><br><B>[2]</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>Proposed&nbsp;Revenue</B><br><B>[3]</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>Cost&nbsp;per<BR>CCF @<BR>Current<BR>Rates</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>Cost per<BR>CCF @<BR>Proposed<BR>Rates</B></TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>


<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Residential Heating <FONT STYLE="white-space:nowrap">(R-2)</FONT></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">14,459,686</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">11,493,243</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">13,485,687</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.79</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.93</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Residential <FONT STYLE="white-space:nowrap">Non-Heating</FONT>
<FONT STYLE="white-space:nowrap">(R-1)</FONT></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">623,674</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,298,049</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,523,127</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">2.08</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">2.44</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Low Annual, High Winter Use
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">(G-40/T-40)</FONT></FONT></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">14,999,927</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">9,183,658</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">10,295,549</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.61</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.69</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Low Annual, Low Winter Use
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">(G-50/T-50)</FONT></FONT></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1,406,384</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">978,814</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,100,402</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.70</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.78</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Medium Annual, High Winter Use
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">(G-41/T-41)</FONT></FONT></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">22,514,299</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">8,618,375</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">9,687,071</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.38</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.43</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Medium Annual, Low Winter Use
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">(G-51/T-51)</FONT></FONT></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">4,944,842</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,763,399</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,982,593</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.36</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.40</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">High Annual, High Winter Use
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">(G-42/T-42)</FONT></FONT></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">21,458,618</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">5,390,183</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">6,070,902</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.25</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.28</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">High Annual, Low Winter Use
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">(G-52/T-52)</FONT></FONT></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">19,015,815</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">4,202,540</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">4,735,667</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.22</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.25</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
</TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">[1]</TD>
<TD ALIGN="left" VALIGN="top">Exhibit <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">DLG/PMN-1G-8,</FONT></FONT> page 1, column F </TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">[2]</TD>
<TD ALIGN="left" VALIGN="top">Exhibit <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">DLG/PMN-1G-8,</FONT></FONT> page 2, coulmn R </TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">[3]</TD>
<TD ALIGN="left" VALIGN="top">Exhibit <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">DLG/PMN-1G-8,</FONT></FONT> page 6, coulmn AE </TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">With respect to intra-class rate design, in most cases, the Company proposed relatively higher increases to the monthly customer charges
compared to the usage charges. For the usage charges, the Company proposed to maintain the existing arithmetic difference between the charges per usage block in each class which results in relatively higher percentage increases to the higher usage
block charges. The proposed rate changes are shown in Figure VI.3 below. </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-42-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Figure VI.3 </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="73%"></TD>
<TD VALIGN="bottom" WIDTH="4%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="4%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="4%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom" COLSPAN="12" NOWRAP ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>Rate Increase</B></P></TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom" NOWRAP> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-bottom:1.00pt solid #000000; width:58.00pt; display:inline; font-size:8pt; font-family:Times New Roman; "><B>Rate Component</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>Current&nbsp;Rate</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>Proposed&nbsp;Rate</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>%&nbsp;Increase</B></TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>


<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="12" ALIGN="center"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman" ALIGN="center">Residential
<FONT STYLE="white-space:nowrap">Non-Heating</FONT> (R1)</P></TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">&nbsp;</P></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Customer Charge</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">25.11</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">28.85</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">14.89</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Distribution Charge - First 40 units<SUP STYLE="font-size:85%; vertical-align:top">1
</SUP></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.3755</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.4668</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">24.31</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Distribution Charge - Excess 40 units</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.2854</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.3767</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">31.99</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="8" COLSPAN="13"></TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="12" ALIGN="center"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman" ALIGN="center">Residential Heating (R2)</P></TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">&nbsp;</P></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Customer Charge</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">25.11</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">28.85</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">14.89</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Distribution Charge - First 40 units</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.4599</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.5245</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">14.05</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Distribution Charge - Excess 40 units</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.3520</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.4166</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">18.35</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="8" COLSPAN="13"></TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="12" ALIGN="center"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman" ALIGN="center">General Service: Low Annual, High Winter use (G40)
<I>and </I>Low Annual, Low Winter use (G50)</P></TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><I></I>&nbsp;</P></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Customer Charge</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">59.63</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">68.50</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">14.88</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Distribution Charge - First 70 units</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.3070</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.3331</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">8.50</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Distribution Charge - Excess 70 units</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.2834</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.3095</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">9.21</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="8" COLSPAN="13"></TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="12" ALIGN="center"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman" ALIGN="center">General Service: Medium Annual, High Winter use (G41) -
Winter Rate</P></TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">&nbsp;</P></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Customer Charge</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">174.07</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">200.00</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">14.90</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Distribution Charge - First 1,780 units</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.2947</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.3177</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">7.80</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Distribution Charge - Excess 1,780 units</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.2800</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.3030</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">8.21</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="8" COLSPAN="13"></TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="12" ALIGN="center"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman" ALIGN="center">General Service: Medium Annual, High Winter use (G41) -
Summer Rate</P></TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">&nbsp;</P></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Customer Charge</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">174.07</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">200.00</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">14.90</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Distribution Charge - First 1,000 units</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.2852</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.3080</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">7.99</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Distribution Charge - Excess 1,000 units</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.2592</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.2822</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">8.87</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="8" COLSPAN="13"></TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="12" ALIGN="center"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman" ALIGN="center">General Service: Medium Annual, Low Winter use (G51) -
Winter Rate</P></TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">&nbsp;</P></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Customer Charge</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">174.07</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">200.00</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">14.90</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Distribution Charge - First 1,780 units</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.2632</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.2844</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">8.05</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Distribution Charge - Excess 1,780 units</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.2485</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.2697</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">8.53</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="8" COLSPAN="13"></TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="12" ALIGN="center"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman" ALIGN="center">General Service: Medium Annual, Low Winter use (G51) -
Summer Rate</P></TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">&nbsp;</P></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Customer Charge</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">174.07</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">200.00</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">14.90</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Distribution Charge - First 1,000 units</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.2538</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.2750</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">8.35</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Distribution Charge - Excess 1,000 units</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.2278</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.2490</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">9.31</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="8" COLSPAN="13"></TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="12" ALIGN="center"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman" ALIGN="center">General Service: High Annual, High Winter use (G42) -
Winter Rate</P></TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">&nbsp;</P></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Customer Charge</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,004.76</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,150.00</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">14.46</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Distribution Charge - First 18,000 units</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.2712</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.2924</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">7.82</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Distribution Charge - Excess 18,000 units</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.2361</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.2573</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">8.98</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="8" COLSPAN="13"></TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="12" ALIGN="center"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman" ALIGN="center">General Service: High Annual, High Winter use (G42) -
Summer Rate</P></TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">&nbsp;</P></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Customer Charge</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,004.76</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,150.00</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">14.46</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Distribution Charge - First 6,000 units</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.2260</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.2472</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">9.38</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Distribution Charge - Excess 6,000 units</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.1888</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.2100</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">11.23</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="8" COLSPAN="13"></TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="12" ALIGN="center"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman" ALIGN="center">General Service: High Annual, Low Winter use (G52) -
Winter Rate</P></TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">&nbsp;</P></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Customer Charge</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,004.76</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,150.00</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">14.46</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Distribution Charge - First 25,000 units</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.2481</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.2667</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">7.50</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Distribution Charge - Excess 25,000 units</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.2064</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.2250</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">9.01</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="8" COLSPAN="13"></TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="12" ALIGN="center"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman" ALIGN="center">General Service: High Annual, Low Winter use (G52) -
Summer Rate</P></TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">&nbsp;</P></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Customer Charge</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,004.76</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,150.00</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">14.46</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Distribution Charge - First 23,000 units</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.1838</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.2024</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">10.12</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Distribution Charge - Excess 23,000 units</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.1427</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0.1613</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">13.03</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Source: Exhibit
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">DLG/PMN-1G-9</FONT></FONT></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
</TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><SUP STYLE="font-size:85%; vertical-align:top">1</SUP></TD>
<TD ALIGN="left" VALIGN="top"><SUP STYLE="font-size:85%; vertical-align:top"></SUP>Current rate units are ccf, proposed rate units are thm </TD></TR></TABLE>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-43-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>

<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">B.</TD>
<TD ALIGN="left" VALIGN="top"><U>Positions of the Parties</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Company asserts that the majority of its distribution
costs are fixed in nature and not driven by usage. Northern Reply Brief at 28. As noted above, Northern also concluded that commercial and industrial classes are subsidizing the residential classes. Northern Brief at 123. In support of its
conclusions the Company cites the rather voluminous ACOS and MCOS studies and workpapers prepared by its witnesses Mr. Normand and Ms. Gajewski. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The goal of the Company was to allocate the overall revenue requirement to each revenue class such that the revenue requirement for each class
produced an equalized rate of return (8.30%). <I>Id</I>. at 121. As noted above, this allocation yielded a very large increase to existing residential class revenue levels, and so the Company imposed a cap limitation on the residential revenue
increase of 125% of the overall Company increase and allocated the remaining revenue requirement above the cap to the other classes. <I>Id</I>. at 122. After allocating the revenue requirement to each class, the Company determined the intra-class
allocation between fixed and volumetric charges. The intra-class allocation was designed to be reflective of the fixed nature of the distribution charges. <I>Id</I>. at <FONT STYLE="white-space:nowrap">122-123.The</FONT> remaining intra-class
revenue requirement not assigned to fixed customer charges was allocated to the block prices in a way that maintained the existing block differentials. <I>Id</I>. at 123. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Company also contends that if the requested revenue requirement is reduced, the reduction should be reflected in the usage charges while
maintaining the fixed customer charges as proposed in its filing. <I>Id</I>. at 124. According to Northern, this is reasonable because the proposed customer charges are below the actual cost to serve. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The OPA did not present an alternative revenue allocation and rate design proposal but argues that only fixed costs directly related to
attaching customers to the system should be included in fixed customer charges. OPA Brief at 41. The OPA asserts that, because Northern&#146;s investment decisions for main extensions and new service lines are based on a net present value (NPV)
analysis, a customer with higher usage will cause Northern to incur greater investment and other costs than a customer with lower usage. <I>Id</I>. at 40. The OPA concludes that <FONT STYLE="white-space:nowrap">low-</FONT> and high- usage customers
therefore do not impose the same level of fixed costs on Northern, and so a finding that a majority of costs are fixed and could therefore be collected through customer charges, violates the principle of cost causation. <I>Id</I> at <FONT
STYLE="white-space:nowrap">40-41.</FONT> The OPA also contends that rate stability and gradualism should be taken into consideration when designing monthly customer charges. <I>Id</I>. at 41. Finally, the OPA reasons that if the Commission does not
approve the entire revenue increase requested, the reduced amount should be reflected in both the fixed and volumetric charges. OPA Reply Brief at 10. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In its Bench Analysis, Staff expresses some concerns with the Company&#146;s analysis and proposal as presented by the MAC consultants. First,
Staff stated that if a revenue requirement increase close to what the Company has requested were to be </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-44-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
granted, the increase for the residential class would be unduly burdensome as it would result in an increase of nearly 20% for average residential customers, even after applying the
Company&#146;s 125% revenue increase cap. Bench Analysis at <FONT STYLE="white-space:nowrap">57-58.</FONT> Staff deferred making a final recommendation on rate design, but noted that rate design issues such as revenue allocation involve judgement
and consideration of factors such as rate stability, the overall level of the revenue requirement increase and potential future rate increases from the TIRA. <I>Id</I>. at 58. Staff generally agreed with Northern&#146;s conclusion that distribution
system costs tend to be fixed in nature. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Staff observed that, although the Company&#146;s proposed rate design was informed by the cost
of service studies, it ultimately appeared to have been more a matter of judgement. <I>Id</I>. at 59. For example, Staff questioned why it was desirable or necessary to maintain a constant <FONT STYLE="white-space:nowrap">dollar-per-ccf</FONT>
differential between rate block usage charges as proposed by the Company, as this seemed to conflict with the Company&#146;s position that the cost of service is largely fixed. <I>Id</I>. at <FONT STYLE="white-space:nowrap">59-60.</FONT> </P>
<P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">1.</TD>
<TD ALIGN="left" VALIGN="top"><U>CCF to Therm</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Northern proposes to change its current practice of billing on a ccf basis
to billing on a therm basis. Gajewski/Normand Dir. Test. at 37. Northern asserts that because heat content, rather than the amount of ccf, dictates the customer&#146;s need for natural gas, it is more reasonable to base the Company&#146;s
distribution rates on therms over ccf. <I>Id</I>. at 38. Northern also notes that other LDCs base their distribution rates on therms, as do the Company&#146;s affiliated LDCs in New Hampshire and Massachusetts. <I>Id</I>. This proposal has not been
contested by any party. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">2.</TD>
<TD ALIGN="left" VALIGN="top"><U>Telemetering Changes</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Northern proposes to adjust charges and fees related to the Retail
Choice Program, as found in Appendix A to the Company&#146;s Delivery Service Terms and Conditions, to better reflect cost. Leblanc/Sprague Dir. Test. at 38. These changes include: Telemetering Fees for the
<FONT STYLE="white-space:nowrap">One-Time</FONT> Installation of an instrumented or <FONT STYLE="white-space:nowrap">non-instrumented</FONT> meter; the Monthly Surcharge Fee in lieu of <FONT STYLE="white-space:nowrap">One-time</FONT> Installation
Charge for a <FONT STYLE="white-space:nowrap">non-instrumented</FONT> meter (optional); and the Monthly (Telemeter) Maintenance Fee. <I>Id</I>. Northern is also proposing a Meter Read Charge for when a customer-maintained phone line is not reporting
daily telemetered usage and the Company is required to make a specific trip to the customer location at the end of the billing cycle in order to read the meter and obtain the daily usage data. <I>Id</I>. In addition, the Company is proposing to
update its <FONT STYLE="white-space:nowrap">Turn-On</FONT> Charge, as found in the Company&#146;s Rate Schedules. <I>Id</I>. The proposed cost for each service is based on the labor and travel expenses required. <I>Id</I>. at 39. These adjustments
have not been contested by any party. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">C.</TD>
<TD ALIGN="left" VALIGN="top"><U>Discussion and Decision</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">As noted above, the Company&#146;s proposed revenue allocation
and rate design are based on the cost of service studies conducted by its consultants. According to the MAC consultants, both the ACOS and the MCOS indicate similar results in terms of: (1) revenue </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-45-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
deficiencies in the residential classes; and (2)&nbsp;the fixed nature of most of the costs of the distribution system. The studies, in particular, the ACOS, are premised on the rate base,
expenses, and cost of capital reflected in the Company&#146;s proposed revenue requirement, as well as income taxes calculated in accordance with the prior tax law. With respect to the MCOS, although it is not based on accounting costs, it does
reflect the higher income tax rates that were in effect prior to the recent change. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">As discussed in prior sections of this Order, the
components of the revenue requirement authorized by the Commission in this proceeding differ in several key respects from the Company&#146;s proposal. The authorized revenue requirement also reflects the effects of the new tax law. Although such a
&#147;mis-match&#148; may often occur when a utility proposes rate design changes as part of a revenue requirement case, based on the degree of the differences in this case, including the impact of <FONT STYLE="white-space:nowrap">tax-related</FONT>
issues, the Commission cannot find the cost of service studies to be reliable for the purpose of determining class revenue allocations and intra-class rate design. Typically, when rate changes are implemented without reliance on a cost of service
study, the changes are made on an equal percentage basis. For example, if the overall Company revenue requirement is to be increased by 4%, the revenue requirement for each class would also be increased by 4%. Thus, given the lack of a reliable cost
of service study in this case, the Commission concludes that the revenues from each rate class should be adjusted by the same percentage as the overall change in the Company&#146;s revenue requirements. As discussed above, this would result in a
slight decrease in the revenues from each class. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">With respect to intra-class rate design, however, the Commission agrees with the Company
that much of the costs of an LDC distribution system are fixed and do not vary with usage. In the Commission&#146;s view, this appears obvious and does not require detailed and precise results of an ACOS or MCOS.<SUP
STYLE="font-size:85%; vertical-align:top">12</SUP> As shown below in Figure VI.4, however, the portion of Northern&#146;s revenues that are currently recovered though customer charges varies widely across its customer classes, ranging from more than
80% for residential <FONT STYLE="white-space:nowrap">non-heating</FONT> customers to less than 10% for high use commercial/industrial customers. </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="line-height:8.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000;width:10%">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><SUP STYLE="font-size:85%; vertical-align:top">12</SUP>&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">In its Brief, the OPA argues that the Company&#146;s terms and conditions for new services and main extensions support the proposition that customers with relatively higher usage levels would cause it to incur higher
investment and other costs than customers with lower usage. OPA Brief at 40. The Commission finds no support for this proposition in these terms and conditions. On the contrary, the NPV test cited by the OPA would be likely to yield a more favorable
outcome in terms of expansion for customers with relatively higher usage because of the relatively higher revenue contribution over the term on the NPV analysis. </TD></TR></TABLE>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-46-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Figure VI.4 </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="84%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="57%"></TD>
<TD VALIGN="bottom" WIDTH="7%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="7%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="7%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom" COLSPAN="12" NOWRAP ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>Revenue by Component</B></P></TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom" NOWRAP> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-bottom:1.00pt solid #000000; width:18.20pt; display:inline; font-size:8pt; font-family:Times New Roman; "><B>Class</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>Existing&nbsp;Revenue<BR>[1]</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>Existing&nbsp;Customer<BR>Charge Revenue<BR>[2]</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>Pct&nbsp;Customer<BR>Charge</B></TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>


<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Residential Heating <FONT STYLE="white-space:nowrap">(R-2)</FONT></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">11,493,243</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">5,749,374</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">50.02</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Residential <FONT STYLE="white-space:nowrap">Non-Heating</FONT>
<FONT STYLE="white-space:nowrap">(R-1)</FONT></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1,298,049</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1,076,554</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">82.94</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Low Annual, High Winter Use
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">(G-40/T-40)</FONT></FONT></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">9,183,658</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">4,842,959</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">52.73</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Low Annual, Low Winter Use
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">(G-50/T-50)</FONT></FONT></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">978,814</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">570,627</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">58.30</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Medium Annual, High Winter Use
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">(G-41/T-41)</FONT></FONT></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">8,618,375</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">2,195,581</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">25.48</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Medium Annual, Low Winter Use
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">(G-51/T-51)</FONT></FONT></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1,763,399</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">521,160</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">29.55</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">High Annual, High Winter Use
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">(G-42/T-42)</FONT></FONT></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">5,390,183</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">467,213</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">8.67</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">High Annual, Low Winter Use
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">(G-52/T-52)</FONT></FONT></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">4,202,540</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">519,461</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">12.36</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="font-size:1px; ">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Total</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">42,928,261</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">15,942,929</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">37.14</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="font-size:1px; ">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="8" COLSPAN="13"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="12"> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:2.00em; text-indent:-2.00em; font-size:10pt; font-family:Times New Roman">[1]&#8194;&#8201;&#8202;Exhibit <FONT STYLE="white-space:nowrap"><FONT
STYLE="white-space:nowrap">DLG/PMN-1G-8,</FONT></FONT> page 2, coulmn R</P> <P STYLE="font-size:2pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; margin-left:2.00em; text-indent:-2.00em; font-size:10pt; font-family:Times New Roman">[2]&#8194;&#8201;&#8202;Exhibit
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">DLG/PMN-1G-8,</FONT></FONT> page 2, coulmn Q</P></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:2.00em; text-indent:-2.00em; font-size:10pt; font-family:Times New Roman">&#8194;&#8201;&#8202;&nbsp;</P> <P STYLE="font-size:2pt;margin-top:0pt;margin-bottom:0pt"></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; margin-left:2.00em; text-indent:-2.00em; font-size:10pt; font-family:Times New Roman">&#8194;&#8201;&#8202;&nbsp;</P></TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Given this variation, the Commission finds that, for certain classes, specifically, the Medium and High Annual
Use classes <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">(G-41/T-41;</FONT></FONT> <FONT STYLE="white-space:nowrap">G-51/T51;</FONT> <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">G-42/T-42;</FONT></FONT> and <FONT
STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">G-52/T-52)</FONT></FONT> the revenue requirement decrease discussed above should be allocated in full to the usage charges, and there should be no change to the customer charges.
Specifically, the usage charge for each block within these classes should be reduced by the same percentage. This would result in a slight change in the portion of the revenues recovered through the customer charge in each of these classes. For all
other classes, specifically the Residential and Low Annual Use classes, the customer charges and usage charges should be reduced by the same percentage. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><B>VII.</B></TD>
<TD ALIGN="left" VALIGN="top"><B>TARGETED INFRASTRUCTURE REPLACEMENT MECHANISM </B></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">A.</TD>
<TD ALIGN="left" VALIGN="top"><U>Background</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The original TIRA mechanism (TIRA 1) was approved by the Commission in the
Company&#146;s most recent base rate case. <I>Northern Utilities Inc. d/b/a/ Unitil, Proposed </I><I>Increase in Rates</I>, Docket No.&nbsp;2013-00133 (Dec. 27, 2013) <I>(2013-00133 Order).</I> TIRA 1, which was established for a four-year period,
is a &#147;capital tracker&#148; that allows for recovery in rates of the costs associated with certain Company capital programs; specifically, the CIRP, the Unprotected Steel Replacement Program (UPS), and the Farm Tap Regulator Program (FTR). </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The CIRP is a fourteen-year (2011-2024) construction project to replace approximately 70 miles of cast iron, wrought iron, and unprotected
steel pipe in the Company&#146;s low pressure distribution system in Portland and Westbrook and to perform related system improvements. The CIRP also involves a pressure conversion from <FONT STYLE="white-space:nowrap">low-pressure</FONT> to
intermediate pressure, which will allow the system to better accommodate </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-47-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
customer growth. The CIRP was motivated by safety concerns stemming from the age and leak-prone nature of this pipe in this portion of the Company&#146;s system. The parameters of the CIRP,
including the project scope and schedule, were approved by the Commission in its Order Approving Stipulation in Docket No.&nbsp;2008-00151. <I>Public Utilities Commission, Investigation Into Cast Iron Replacement Program in Portland and Westbrook
for Northern Utilities Inc. d/b/a Unitil,</I> Order (July 30, 2010) <I>(CIRP Order)</I>. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The UPS program, which began in 2014, is a
project to replace approximately 10 miles of unprotected steel mains and services on the Company&#146;s intermediate pressure system. As with the CIRP, the UPS program was motivated by safety concerns about the potential for corrosion of the
unprotected pipe. The FTR program, which also began in 2014, involves the replacement of more than 100 direct buried pressure regulating devices with new regulators that will be installed in an enclosure to shield the device from direct contact with
the ground. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Pursuant to TIRA 1, rates have been adjusted on May&nbsp;1 of each year (2014-2017) to reflect recovery of investments made
in the prior calendar year (2013-2016) for the CIRP, UPS and FTR programs, subject to certain conditions. The conditions include the Company meeting certain cost and schedule metrics which are set by reference to the Company&#146;s Earned Value
Management (EVM) model. The last rate adjustment under TIRA 1 was effective May&nbsp;1, 2017. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">As described by the Company in various
filings, EVM is a valuable and widely-used project management practice to track performance. EVM requires an <FONT STYLE="white-space:nowrap">up-front,</FONT> well-defined scope of work and budget for each discrete component of a project, as well as
defined metrics. Performance can then be tracked by comparing actual work completed and actual cost against the metrics. The Company&#146;s EVM for the CIRP, UPS, and FTR programs established planning estimates on a per unit basis for each component
of the program for: (1)&nbsp;the quantity of units to be installed in each year; and (2)&nbsp;the cost per unit. Given the length, scope and complexity of projects like the CIRP, EVM allows overall progress to be tracked even if actual work on a <FONT
STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">year-to-year</FONT></FONT> basis diverges from the original plan. As discussed below, certain key elements of TIRA 1 were established based on the EVM that had been developed by the Company
prior to starting construction on the CIRP, UPS, and FTR programs and, at least in the case of the CIRP, prior to its TIRA proposal. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Under TIRA 1, annual rate adjustments were subject to the Company meeting two performance metrics; one that measured its cost performance and
one that measured its schedule performance. The Cost Performance Index (CPI) and Schedule Performance Index (SPI) were set by reference to the Planned Value (PV) and Earned Value (EV) at a given point during the project, as reflected by the values
in the Company&#146;s EVM model. Specifically, the aggregate of the per unit quantity and cost values reflected in the EVM established the PV for each year against which actual performance was tracked. The EV, then, was calculated as the product of
the units actually installed in each year on a cumulative basis and the originally estimated cost per unit. </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-48-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The CPI was defined by the relationship between Earned Value and Actual Cost, specifically EV/AC.
If the cumulative Earned Value was equal to, or greater than, the cumulative Actual Cost (which translates to a CPI =&gt; 1.0), the project would be considered to be under budget. Conversely, if the Actual Cost exceeded the Earned Value (CPI &lt;
1.0), the project would be considered to be over budget. The SPI was defined by the relationship between Planned Value and Earned Value, specifically, EV/PV. If the Earned Value exceeded the Planned Value, (SPI =&gt; 1.0), the project would be
considered to be ahead of schedule and, if not, the project would be considered to be behind schedule. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Under TIRA 1, a rate adjustment
would be made only if the Company was meeting both the CPI and the SPI. Specifically, both indices must, on a cumulative basis be equal to or greater than 1.0 since the start of the program. If either the CPI or the SPI was less than 1.0, TIRA 1
would have been suspended pending a review by the Commission of the reasonableness of the Company&#146;s performance. To date, as shown in Figure VII.1 below, in each year the Company has met both the CPI and SPI, although, in some years, the CPI
has been very close to 1.0.<SUP STYLE="font-size:85%; vertical-align:top">13</SUP> </P> <P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><U>Figure VII.1 </U></P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="80%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="18%"></TD>
<TD VALIGN="bottom"></TD>
<TD WIDTH="19%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="20%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="20%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="19%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="3" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:Times New Roman" ALIGN="center">Annual</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="3" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:Times New Roman" ALIGN="center">Cumulative</P></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:Times New Roman" ALIGN="center">Year</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:Times New Roman" ALIGN="center">CPI</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:Times New Roman" ALIGN="center">SPI</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:Times New Roman" ALIGN="center">CPI</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:Times New Roman" ALIGN="center">SPI</P></TD></TR>


<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" ALIGN="center"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman" ALIGN="center">2011</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">1.19</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">1.05</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">1.19</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">1.05</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" ALIGN="center"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman" ALIGN="center">2012</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">1.12</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">1.15</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">1.15</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">1.11</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" ALIGN="center"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman" ALIGN="center">2013</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">0.95</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">1.39</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">1.08</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">1.19</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" ALIGN="center"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman" ALIGN="center">2014</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">0.98</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">0.97</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">1.05</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">1.12</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" ALIGN="center"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman" ALIGN="center">2015</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">0.89</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">1.34</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">1.004</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">1.17</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" ALIGN="center"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman" ALIGN="center">2016</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">1.04</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">0.99</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">1.01</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">1.14</TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The annual rate increase under TIRA 1 was capped at 4% (Rate Cap). TIRA 1 also included an Earning Sharing
Mechanism (ESM) pursuant to which earnings between 10% and 11% would be shared on a 50/50 basis between the Company and ratepayers and earnings in excess of 11% would be returned to ratepayers. Neither the Rate Cap nor the ESM was triggered under
TIRA 1. Figure VII.2 below provides the percentage rate increases for each year of TIRA 1. </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="line-height:8.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000;width:10%">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><SUP STYLE="font-size:85%; vertical-align:top">13</SUP>&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Figure VII.1 includes the CPI and SPI for the entire construction period, a portion of which <FONT STYLE="white-space:nowrap">pre-dates</FONT> the TIRA. </TD></TR></TABLE>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-49-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><U>Figure VII.2 </U></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>TIRA 1 Rate Adjustments </B></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="92%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="52%"></TD>
<TD VALIGN="bottom" WIDTH="4%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="4%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="4%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="4%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom" NOWRAP><B>Docket</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><B>2014-00059</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><B>2015-00054</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><B>2016-00033</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><B>2017-00035</B></TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom" NOWRAP><B>Effective Date</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><B>05/01/2014</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><B>05/01/2015</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><B>05/01/2016</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><B>05/01/2017</B></TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom" NOWRAP> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-bottom:1.00pt solid #000000; width:95.10pt; display:inline; font-size:8pt; font-family:Times New Roman; "><B>Revenue Requirement Year</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>2 0 1 3</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>2 0 1 4</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>2 0 1 5</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>2 0 1 6</B></TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>


<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Weather Normalized Distribution Revenues</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">34,820,388</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">38,245,776</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">40,571,502</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">42,209,471</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">TIRA Rate Base</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">7,929,942</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">16,229,488</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">25,880,698</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">33,274,588</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Incremental TIRA Revenue Requirement</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,287,956</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,154,626</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,539,337</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,102,389</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Total TIRA Revenue Requirement</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,287,956</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">2,442,582</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">3,981,919</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">5,084,307</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Increase as % of Distribution Revenues</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">3.70</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">3.02</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">3.79</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">2.61</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="8" COLSPAN="17"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="16"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B><I>Source of data: Company filing in Docket No.&nbsp;2017-00035; Exhibit <FONT
STYLE="white-space:nowrap">DLC-1,</FONT> p.1</I></B></P></TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B><I>&nbsp;</I></B></P></TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Described generally, the TIRA rate adjustments in each year reflected the difference between the CIRP, UPS and
FTR related revenue requirement in the prior calendar year and the revenue requirement for these programs for the calendar year before that. Under TIRA 1, the return on rate base was 11%, which was less than the return on the rest of the
Company&#146;s rate base allowed by the Commission in Docket No.&nbsp;2013-00133. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">B.</TD>
<TD ALIGN="left" VALIGN="top"><U>Actual Costs and Revised EVM model</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">As described in the Leblanc/Sprague testimony, the
Company is proposing to amend the scope and cost of the CIRP, UPS, and FTR programs to reflect its clearer understanding of the requirements of the program gained from almost seven years of construction experience. According to Leblanc/Sprague:
&#147;Northern has a clearer understanding of the actual condition and composition of its underground distribution system, which allows the Company to more accurately estimate the scope of work that remains necessary to complete the
CIRP/UPS/FT.&#148; Leblanc/Sprague Dir. Test. at 4. The Company amended its EVM model accordingly, and is proposing to use the amended EVM model to measure the CPI and SPI under its proposed TIRA extension. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">During the first several years of construction of the CIRP, UPS and FTR programs, actual costs exceeded the Company&#146;s original estimates
by about $9.1&nbsp;million, or approximately 33%. Figure VII.3 below provides a summary of these cost variances by category. </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-50-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><U>Figure VII.3 </U></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Northern Utilities CIRP/UPS/FT EVM </B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Original Plan vs.
Actual Cost; 2011-2016 </B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Nominal Dollars </B></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="61%"></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom" NOWRAP> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-bottom:1.00pt solid #000000; width:14.60pt; display:inline; font-size:8pt; font-family:Times New Roman; ">Item</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" NOWRAP ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">Original<br>Estimate</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" NOWRAP ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">Actual Cost</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" NOWRAP ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">$&nbsp;Delta&nbsp;Actual<br>Cost/ Original<BR>Estimate</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" NOWRAP ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">Percent&nbsp;Delta<BR>Actual Cost/<BR>Original<br>Estimate</TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>


<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>CIRP</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Main Installation</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">9,651,110</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">18,158,158</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">8,507,047</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">88.1</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Critical&nbsp;&amp; System Valves</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">84,529</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">($</TD>
<TD VALIGN="bottom" ALIGN="right">84,529</TD>
<TD NOWRAP VALIGN="bottom">)&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">-100.0</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Service Renewals</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">10,932,513</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">7,850,818</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">($</TD>
<TD VALIGN="bottom" ALIGN="right">3,081,695</TD>
<TD NOWRAP VALIGN="bottom">)&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">-28.2</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Meter Work</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,924,978</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,708,993</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">($</TD>
<TD VALIGN="bottom" ALIGN="right">215,985</TD>
<TD NOWRAP VALIGN="bottom">)&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">-11.2</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">System Uprates</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">2,420,197</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">2,174,371</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">($</TD>
<TD VALIGN="bottom" ALIGN="right">245,826</TD>
<TD NOWRAP VALIGN="bottom">)&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">-10.2</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Regulator Stations</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">223,139</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">879,489</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">656,350</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">294.1</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">System Improvements</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">917,035</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">2,434,357</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,517,323</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">165.5</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>UPS</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Main Installation</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">702,427</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">2,365,401</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,662,974</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">236.7</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Service Renewals</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">408,599</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">489,563</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">80,964</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">19.8</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Meter Work</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">31,829</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">47,234</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">15,405</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">48.4</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>FTR</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Farm Tap Regulators</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right"> 401,821</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">687,821</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">286,000</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">71.2</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>TOTAL (w/o PM and contingency)</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">27,698,178</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">36,796,206</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">9,098,027</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">32.8</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Source of data: Company filing in 2017-00035 and response to <FONT STYLE="white-space:nowrap"><FONT
STYLE="white-space:nowrap">EX-002-005</FONT></FONT> in 2017-00065. </I></B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">As shown above, the vast majority of the difference between
estimated and actual costs is attributable to main installations. According to the Company, these main-related increases were primarily caused by two factors: (1)&nbsp;the need to direct-bury rather than insert new main; and (2)&nbsp;unanticipated
permitting and compliance costs resulting from stricter-than-expected enforcement of codes and ordinances by the City of Portland which principally consists of street opening permits, pavement restoration and working conditions (e.g., night and
weekend work). These two factors are related because compliance with Portland&#146;s street opening permit process involves factors that may also affect the direct bury process, e.g., the pavement restoration process. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Regarding the need to direct bury more pipe, the Company stated that it is more expensive to install a mile of main by direct bury when
compared to pipe insertion.<SUP STYLE="font-size:85%; vertical-align:top">14</SUP> </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="line-height:8.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000;width:10%">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><SUP STYLE="font-size:85%; vertical-align:top">14</SUP>&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">&#147;Direct bury,&#148; also referred to as &#147;open trench construction,&#148; requires that a trench for the main be excavated to the appropriate depth for the entire length of the main being installed. After the
main has been lowered into the trench it is backfilled, compacted and the pavement is restored. &#147;Pipe insertion&#148; is a construction technique that allows a new plastic main to be installed inside a larger existing underground low-pressure
cast iron or steel gas main. Pipe insertion provides significant cost savings over direct bury construction of a new replacement main, primarily due to the lack of need to open a trench for the entire length of the new main being installed.
</TD></TR></TABLE>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-51-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">When the cost of the CIRP was initially estimated, the Company believed it would need to replace 69 miles of cast
iron and unprotected steel main and that about 65% of the new main (<I>i.e.</I>, about 45 miles) could be installed using insertion. Based on this ratio of 65% insertion to 35% open trench, the Company derived a blended average per mile cost for
main installations of $303,937. During the first six years of the CIRP, however, the Company stated it was only able to use insertion for about 43% of the new mains installed. Because a greater proportion of mains were being replaced by the more
expensive open trench method than initially estimated, the actual average cost per mile of installed mains was much higher than the original blended cost estimate. LeBlanc/Sprague Dir. Test. at 13. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">As noted above, the Company is proposing to revise its EVM model to reflect its expected scope and cost for the remaining years of
construction (2017-2024). The revised metrics are based on the Company&#146;s experience with the project scope and costs over the past several years and are further informed by the terms of its contract with its construction contractor for the
project, NEUCO.<SUP STYLE="font-size:85%; vertical-align:top">15</SUP> The metrics also include a contingency of ten percent, as well as an additional amount of approximately eight percent for project management. Leblanc/Sprague Dir. Test. at 31.
Compared to the original EVM, the revised EVM reflects an increase in project costs of about $15&nbsp;million, or 30%, during these years. Figure VII.4 below shows the variance by category. </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="line-height:8.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000;width:10%">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><SUP STYLE="font-size:85%; vertical-align:top">15</SUP>&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">The NEUCO contract has been extended through 2021 with an option for an additional four-year renewal covering the period 2022 &#150; 2025. Leblanc/Sprague Dir. Test. at 32. </TD></TR></TABLE>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-52-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><U>Figure VII.4 </U></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Northern Utilities CIRP/UPS/FT EVM </B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>2017 - 2024
Comparison </B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Real 2017$ </B></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="64%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom" NOWRAP> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-bottom:1.00pt solid #000000; width:14.60pt; display:inline; font-size:8pt; font-family:Times New Roman; ">Item</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">Original&nbsp;EVM<BR>Total&nbsp;Cost&nbsp;2017<br>2024</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">Updated&nbsp;EVM<BR>Total Cost<BR>(2017 - 2024)</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">$&nbsp;Delta&nbsp;Total<BR>Cost</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">Percent<BR>Delta&nbsp;Total<br>Cost</TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>


<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>CIRP</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Main Installation</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">13,895,865</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">24,066,263</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">10,170,398</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">73.2</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Critical&nbsp;&amp; System Valves</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">144,504</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">($</TD>
<TD VALIGN="bottom" ALIGN="right">144,504</TD>
<TD NOWRAP VALIGN="bottom">)&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">-100.0</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Service Renewals</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">12,401,031</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">13,702,036</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,301,005</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">10.5</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Meter Work</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">2,303,222</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">2,563,237</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">260,015</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">11.3</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">System Uprates</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,407,107</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">2,750,715</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,343,608</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">95.5</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Regulator Stations</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">390 ,225</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">156,972</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">($</TD>
<TD VALIGN="bottom" ALIGN="right">233,253</TD>
<TD NOWRAP VALIGN="bottom">)&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">-59.8</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">System Improvements</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">2,385,799</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">821,904</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">($</TD>
<TD VALIGN="bottom" ALIGN="right">1,563,895</TD>
<TD NOWRAP VALIGN="bottom">)&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">-65.6</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>UPS</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Main Installation</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">4,839,026</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">6,610,233</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,771,207</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">36.6</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Service Renewals</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">2,951,815</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">3,807,182</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">855,367</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">29.0</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Meter Work</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">234,029</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">323,395</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">89,366</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">38.2</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>FTR</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">0</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Farm Tap Regulators</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">767,909</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">557,083</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">($</TD>
<TD VALIGN="bottom" ALIGN="right">210,826</TD>
<TD NOWRAP VALIGN="bottom">)&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">-27.5</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>SubTotal</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">41,720,532</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">55,359,020</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">13,638,488</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">32.7</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>PM and Contingency</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">8,260,665</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">9,721,044</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">1,460,379</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">17.7</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>Total Project Cost</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">49,981,197</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">65,080,064</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">15,098,867</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">30.2</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Source of data: Company filing in 2017-00035 and Exhibit <FONT STYLE="white-space:nowrap">CLSK-1</FONT> (corrected)
</I></B></P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">C.</TD>
<TD ALIGN="left" VALIGN="top"><U>Positions of the Parties</U> </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">1.</TD>
<TD ALIGN="left" VALIGN="top"><U>Length of Construction Term for the CIRP Program</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In its Brief, the OPA urges the
Commission to expand the construction period for the CIRP program from 2024 to 2027, which the OPA asserts will afford the Company flexibility in the deployment of capital resources while also mitigating the effect of those investments on
ratepayers. OPA Brief at 29. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In its Reply Brief, Northern argues that such an extension is unnecessary and not permissible under the CIRP
Order. Northern Brief at 24. Northern notes that although the CIRP Order contemplated a potential extension, the context was where cost savings could potentially be achieved through coordination with state and municipal construction projects, and
did not indicate a general willingness to extend the term. <I>Id. </I>at 25. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Northern also disputes the OPA&#146;s suggestion that it
will not be able to complete the work by the end of 2024. <I>Id. </I>Finally, Northern rejects the OPA&#146;s argument that extending the term would result in overall cost savings, arguing instead, that because of overall inflation, an extension
would be more likely to increase costs. <I>Id.</I> </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">2.</TD>
<TD ALIGN="left" VALIGN="top"><U>TIRA Design</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Northern is seeking to extend and modify the TIRA. Northern requests that
the Commission extend the TIRA for four more years to cover ClRP/UPS/FT construction during 2017-2020 (TIRA 2). Northern argues that the fundamental structure of TIRA 1 </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-53-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
has been successful and that there is no reason to change the overall structure of the TIRA. Northern Brief at 102. However, Northern does request minor modifications to the TIRA. Northern&#146;s
proposed modifications to the TIRA include: (1)&nbsp;including the costs associated with the installation of certain EFVs within the investments subject to TIRA 2; (2) increasing the rate cap from 4% to 5% of weather-normalized distribution
revenues; and (3)&nbsp;relying upon EVM metrics generated by a <FONT STYLE="white-space:nowrap">re-based</FONT> EVM model. <I>Id</I>. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">While Northern requests a four-year term for TIRA 2, for the reasons noted below, Staff&#146;s Bench Analysis recommended an eight-year term
(2017-2024). Northern states that an eight-year term would lock the Commission, customers, and the Company into the TIRA 2 without the ability of making any adjustments that may be both necessary and appropriate during that time. <I>Id</I>. at 106.
Northern states that a shorter TIRA term will not weaken the incentives for cost control or provide the Company an opportunity to &#147;manage to the metrics,&#148; as suggested in the Bench Analysis. <I>Id</I>. at
<FONT STYLE="white-space:nowrap">106-107.</FONT> </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Northern points out that the Company has a fixed price contract with NEUCO for the next
few years and therefore, Northern states, it has already controlled the unit costs of construction through 2021 by locking them in contractually. <I>Id</I>. at 107. However, Northern states that it has no way to control for field conditions and
argues that no TIRA incentive is capable of fixing or reducing the scope of work necessary to complete the project. <I>Id</I>. at 108. Further, Northern states that there is no evidence in the record that Northern failed to properly manage costs
during the term of TIRA 1. <I>Id</I>. at 107. Northern argues that the TIRA 2 proposal outlined in the Staff&#146;s Bench Analysis would penalize Northern when it experiences field conditions beyond its control and does not take into consideration
the magnitude by which the Company may miss the CPI or SPI. <I>Id</I>. at 113. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Northern recommends that the rate cap be increased from 4%
to 5% for TIRA 2. Northern argues that a rate cap of less than 5% would improperly limit its recovery of its investments in the CIRP/UPS/FT and could lead to the very rate shock that the TIRA rate cap is intended to avoid. <I>Id</I>. at 118.
Northern is also proposing to include EFVs in the TIRA. Northern states that it is proposing to include the EFVs because they are significant safety improvements, but are <FONT STYLE="white-space:nowrap">non-revenue</FONT> producing. Chong Dir.
Test. at 41. Finally, the Company is proposing to increase the O&amp;M offset in the TIRA, based on its recent experience. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The OPA does
not object to the renewal of the TIRA, however, it does oppose the Company&#146;s request to alter certain aspects of the program. OPA Brief at 29. The OPA states that Northern has failed to show that many of its proposed changes to the TIRA program
properly balance the needs of the Company and ratepayers and that TIRA 1 has already had considerable impact on customers since its implementation due to the annual rate increases over the last four years. Id. at
<FONT STYLE="white-space:nowrap">27-29.</FONT> The OPA argues that Northern&#146;s requested increase in the rate cap from four to five percent would discourage the Company from keeping costs under control, would burden ratepayers, and would allow
the Company to recover costs that are not solely driven by safety. <I>Id</I>. at 33. </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-54-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The OPA agrees with the Company&#146;s proposed increase of the O&amp;M savings factor.
<I>Id</I>. at 32. The original TIRA included an O&amp;M offset to reflect the reduction in expenses that would occur as leak-prone pipes were replaced. <I>Id</I>. OPA accepts the Company&#146;s proposal and defers to the analysis in the Bench
Analysis with respect to the application of an inflation adjustment. <I>Id</I>. Finally, based upon the OPA&#146;s recommended rate of return, the OPA states that the <FONT STYLE="white-space:nowrap">pre-tax</FONT> rate of return for the TIRA should
be 9.97&nbsp;percent. <I>Id</I>. at 34. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In its Bench Analysis, Staff recommends that the TIRA be extended but proposed modifications to
Northern&#146;s TIRA 2 proposal. Staff&#146;s primary concern was that any TIRA extension should reflect design changes that would provide stronger incentives for cost control than were provided by TIRA 1. Staff notes that when the CIRP was
initially approved, the Commission stated that any associated rate mechanism must provide: &#147;(an) incentive for Northern to contain the overall costs of the project&#133; (and) will also include disincentives for cost overruns.&#148; Bench
Analysis at 49, citing <I>CIRP Order </I>at 18. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Staff notes that the extent to which TIRA 1 effectively provided such incentives is
unclear. Staff notes that Northern may have not have taken all the steps it could have taken to address the cost increases such as more strenuously negotiating with the City of Portland regarding street opening conditions. Staff notes that, although
the Company stated in its testimony that it has tried to negotiate with the City over these conditions, there is little evidence in the record to substantiate this claim. According to Staff, although the record shows that the Company and the City
had numerous discussions related to the costs for street opening permits and a fine imposed by the City, there is little evidence that the Company sought to negotiate with the City over the actual street opening permit conditions to which it
attributes the cost increases such as night and weekend work and traffic control plans. Staff notes further that there is little evidence provided to document what actual conditions were placed on the Company by the City through the permit process
because they are not stated in the permits or documented elsewhere. Finally, Staff notes that in response to questioning, the Company acknowledged that it did not attempt to negotiate with the City regarding these requirements because the Company
assumed that the City would not be willing to negotiate. <I>Id</I>. at <FONT STYLE="white-space:nowrap">36-41.</FONT> </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Staff notes that
the Company&#146;s management of the project under TIRA 1&nbsp;may, in part, be correlated with the structure of TIRA 1 because it provided an opportunity for the Company to rebase its EVM and to seek to use the rebased EVM for TIRA 2. <I>Id</I>. at
51. While Staff accepted the Company&#146;s revised EVM for TIRA 2, Staff also concluded that no further revisions to the EVM should be made during TIRA 2 and thus recommended that the TIRA be extended through the scheduled end of the project,
rather than the four-year term proposed by Northern. <I>Id</I>. at <FONT STYLE="white-space:nowrap">50-51.</FONT> Without a built in &#147;second (or third) bite at the EVM apple,&#148; Staff concluded that Northern would have a stronger incentive
for cost control and prevent &#147;managing to the metrics&#148; behavior that may have occurred under TIRA 1. <I>Id</I>. at 51. Alternatively, if the Commission were to conclude that a TIRA would not likely provide sufficient incentives to manage
project </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-55-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
costs, Staff notes that the TIRA could be eliminated and the capital costs of the CIRP, UPS and FTR programs treated just like the Company&#146;s other capital investments. Although the TIRA
programs are significant and, to a large degree, not revenue producing, the same can be said for other categories of the Company&#146;s capital investment. <I>Id</I>. at <FONT STYLE="white-space:nowrap">49-50.</FONT> </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">As noted above, for the purpose of TIRA 2, Staff accepts the Company&#146;s revised metrics which, as noted by the Staff, reflect substantial
increases but which are based on the Company&#146;s several years of experience with the projects. Staff agreed that the CPI and SPI should continue to be used to measure performance but suggested two changes to how the TIRA would operate with
respect to these metrics. <I>Id</I>. at 52. Specifically, if either of the metrics (on a cumulative basis starting with 2017) is less than 1.0, there would be no TIRA rate adjustment that year, however, in contrast to TIRA 1, the TIRA would remain
in place. <I>Id</I>. If the Company brought the metric back up to 1.0 or greater in the following year, the rate adjustment would occur at that point and the Company could recover the entire revenue requirement amount attributable to both years.
<I>Id</I>. The Staff noted that having the TIRA remain in place if an index drops below 1.0 provides an incentive for the Company to manage the program to bring the indices back to 1.0. <I>Id</I>. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In addition, Staff proposed to include an ROE <FONT STYLE="white-space:nowrap">up-side</FONT> adjustment to provide an additional incentive
for the Company to control the costs of the TIRA projects. Specifically, if the CPI was equal to 1.0, the ROE would be equal to the Staff recommended ROE for the Company&#146;s rate base. <I>Id</I>. at <FONT STYLE="white-space:nowrap">52-53.</FONT>
The ROE would then be subject to an increase based on a CPI range of 1.0 to 1.3, the upper end of which reflects Actual Costs being about 25% below the Earned Value on a cumulative basis in each year. <I>Id</I>. at 53. The upper end of the ROE range
would be 300 basis points above the Staff recommended ROE, or 12.5%. <I>Id</I>.&nbsp;&nbsp;&nbsp;&nbsp;Additionally, Staff recommended that the TIRA rate of return be subject to an annual adjustment to reflect applicable changes to the cost of
long-term debt. <I>Id</I>. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Staff recommended that Northern&#146;s proposal to include costs associated with the installation of EFVs in
rate base for TIRA 2 be rejected. <I>Id</I>. at <FONT STYLE="white-space:nowrap">46-47.</FONT> Staff noted that simply because a cost has a safety benefit and is <FONT STYLE="white-space:nowrap">non-revenue</FONT> producing does not mean it should
be part of an automatic rate adjustment mechanism like the TIRA. The Company has substantial other costs that are both safety-related and <FONT STYLE="white-space:nowrap">non-revenue</FONT> producing that are not included in the TIRA. Furthermore,
the Staff notes that the Company has not received a single request for an EFV since it provided the required notice to customers in April, 2017. <I>Id</I>. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Staff agreed with Northern&#146;s proposal that the O&amp;M Offset should be updated and based on the Company&#146;s proposed $7,614 per
mile offset. <I>Id</I>. at 33. However, given that the O&amp;M expenses that would be avoided are subject to inflation- driven increases, Staff proposed that the offset be increased each year to reflect general inflation. <I>Id</I>. </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-56-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Staff did not support Northern&#146;s proposal to increase the TIRA rate cap from 4% to 5%.
<I>Id</I>. at 48. Staff stated that the Company&#146;s conclusion that the 4% rate cap was too low did not take into account the increased revenue associated with customer growth, nor any base rate increase that would result from the present
proceeding. <I>Id</I>. at <FONT STYLE="white-space:nowrap">48-49.</FONT> </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Staff recommended continuing an earnings sharing mechanism, but
proposed several modifications. <I>Id</I>. at 54. Going forward, the earnings sharing trigger points would be adjusted to reflect the ROE determined in this case. <I>Id</I>. Any earnings that result in an ROE greater than 9.50%, up to and including
10.50%, would be shared 50/50 with customers. If the ROE is greater than 10.50%, the earnings returned to customers would be 50% of all amounts from 9.50% to 10.50% and 100% of all amounts above 10.50%. <I>Id</I>. Finally, the Staff proposed the ESM
be structured so that any ROE incentive earned by the Company would not be taken back by operation of the ESM. </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">D.</TD>
<TD ALIGN="left" VALIGN="top"><U>Decision</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">As noted above, the OPA has urged the Commission to expand the construction
period for the CIRP program to the end of 2027 rather than 2024. With respect to this recommendation, the Commission finds that the record does not support an extension of the term beyond 2024. Although the Stipulation approved by the Commission in
its CIRP Order did contain a provision that the program could be extended to the end of 2027 if warranted by the need or desirability to coordinate construction with municipal projects to achieve cost efficiencies, the CIRP Order itself articulated
the Commission&#146;s expectation that &#147;the Company shall complete the project in no more than 14 years&#133;&#148; <I>CIRP Order </I>at 15. Moreover, as noted by Northern, there is no evidence to support the proposition that an extension to
accommodate coordination with municipal projects is necessary or would produce cost savings. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">With respect to the TIRA, the Commission
agrees with Northern, the OPA and the Staff that the TIRA should be extended. Additionally, the Commission agrees with the Staff that any TIRA extension should incorporate stronger incentives for cost control and disincentives for cost overruns. As
noted by the Staff in its Bench Analysis, when it initially approved the CIRP, the Commission anticipated that a rate mechanism would be developed and implemented to govern recovery of CIRP costs and that any such rate mechanism must provide:
&#147;(an) incentive for Northern to contain the overall costs of the project&#133; (and) will also include disincentives for cost overruns.&#148; <I>CIRP Order </I>at 18. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The specific TIRA design issues are discussed below. Any element of the TIRA that is not explicitly changed in this proceeding shall be
considered to be the same as approved for TIRA 1, including the reporting requirements and the timing of and methodology used to calculate the percent change in rates. </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">1.</TD>
<TD ALIGN="left" VALIGN="top"><U>Revised EVM</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Commission adopts the Company&#146;s revised EVM to measure cost and
</P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-57-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
schedule performance under TIRA 2. Although the revised EVM reflects costs that are substantially higher than original EVM, the costs are generally reflective of the Company&#146;s actual
experience to date. The original EVM was developed, at least in part, based on system records maintained by Northern&#146;s predecessor that appear not to have been fully accurate or complete. For example, going into the CIRP, Northern expected that
it would be able to replace about 65% of the cast iron main by insertion and only the remaining 35% would require the more expensive open trench method. During the first six years of the project, however, due to the condition and location of the
existing mains, the Company was able to use insertion for only about 43% of the main replacements which resulted in actual costs per mile for main installation being much higher than originally estimated. Leblanc/Sprague Dir. Test. at 13. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The revised EVM is informed by several years of experience with the projects and the project scope for the remainder of the term is
established using detailed engineering plans developed by the Company. In addition, the unit costs are informed by <FONT STYLE="white-space:nowrap">pre-determined</FONT> prices under the contract with the Company&#146;s construction contractor for
the TIRA projects (NEUCO), which was recently extended through 2021 with an option for an additional extension through 2025. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">2.</TD>
<TD ALIGN="left" VALIGN="top"><U>Term</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Commission agrees with the Staff that the term of TIRA 2 should extend through
the end of construction for the TIRA projects which is expected to be 2024. Given the Company&#146;s several years of experience with the TIRA projects, the fixed-cost nature of its contract with NEUCO, and the inclusion of a ten percent
contingency, the revised EVM should provide a reasonable basis against which to track performance and establish rate-making parameters for the remainder of the construction period. The Commission agrees with the Staff that the potential for another
EVM rebase weakens the Company&#146;s incentives for cost control and, moreover, weakens the value of the EVM itself as a project management and tracking tool. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">3.</TD>
<TD ALIGN="left" VALIGN="top"><U>Metrics and Incentives</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Commission agrees with the Company and the Staff that
metrics used in TIRA 1 (i.e., CPI and SPI) should be used to measure performance under TIRA 2. The Commission does not agree with either the Company or the Staff, however, with respect to how the indices would operate. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Under the Company&#146;s proposed approach, it could suspend the TIRA if one of the indices fell below 1.0 and request that the Commission
review the reasonableness of its performance. If its performance was found to be reasonable, the Company could recover the TIRA investments and <FONT STYLE="white-space:nowrap">re-instate</FONT> the TIRA. Under the Staff&#146;s proposed approach, if
one of the indices fell below 1.0, the Company would forego recovery of any of its investment in the prior year and the TIRA would remain in place with the potential that the investment could be recovered in a subsequent year. The Commission finds
neither of these approaches to be ideal. The Company&#146;s proposed approach weakens its incentives to efficiently manage the project and introduces the </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-58-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
potential for requiring ongoing regulatory processes to review the reasonableness of the CIRP/UPS/FT project costs and schedules. Such ongoing regulatory review is not consistent with an
incentive rate mechanism like the TIRA. With respect to the Staff&#146;s proposed approach, the binary, or &#147;all or nothing&#148; nature of how it treats cost recovery if an index is less than 1.0 is overly restrictive. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Thus, rather than adopt either of these approaches, the Commission finds that the amount of TIRA rate base reflected in the TIRA revenue
requirement and rate adjustment each year should be a function of the cumulative CPI and cumulative SPI as of the end of the prior calendar year, with calendar year 2017 being Year 1 of the period. Specifically, a new, blended metric (Blended
Performance Index, or BPI) would be used to determine the percent of the TIRA rate base that will be included in rates. The BPI would reflect both the cumulative CPI and SPI as follows: </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">BPI = 1 &#150; ((1 &#150; CPI Factor) + (1 &#150; SPI Factor)) </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The CPI and SPI Factors would be equal to the cumulative CPI or SPI unless the CPI or SPI was greater than 1.0, in which case the
corresponding Factor would be 1.0. Thus, the BPI reflects each of the indices independently from the other. Stated another way, for example, the operation of the BPI will prevent poor performance on the cost side from being offset by good
performance on the schedule side. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The amount of the TIRA rate base included in the revenue requirement and rate adjustment in any given
year would be the product of the BPI and the TIRA rate base as of the end of the prior calendar year. An illustration of this calculation is shown below in Figure VII.5 below. </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-59-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><U>Figure VII.5 </U></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">TIRA 2 </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Illustration of BPI Application </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman"><I>CPI = EV/AC; SPI = EV/PV. Both are determined on a cumulative basis. </I></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman"><I>IF CPI &gt; 1, CPI Factor = 1.0. IF CPI &lt; 1, CPI Factor = CPI </I></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman"><I>IF SPI &gt; 1, SPI Factor = 1.0. IF SPI &lt; 1, SPI Factor = SPI </I></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman"><I>TPI = 1 - ((1 - CPI Factor) + (1 - SPI Factor)) </I></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="37%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" NOWRAP ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">TIRA Rate<BR>Base</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" NOWRAP ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">Cumulative<BR>CPI</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" NOWRAP ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">CPI&nbsp;Factor</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" NOWRAP ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">Cumulative<BR>SPI</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" NOWRAP ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">SPI&nbsp;Factor</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" NOWRAP ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">Cumulative<BR>Blended<br>Performance<br>Index (BPI)</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" NOWRAP ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">Rate Base<BR>Adjustment<BR>Factor %</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" NOWRAP ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">Rate Base<br>Used for<br>TIRA<br>Cumulative<br>RevReq<br>Calculation</TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>


<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">2017</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">5,500,000</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1.040</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1.000</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1.100</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1.000</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1.000</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">100.0</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">5,500,000</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">2018</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">11,500,000</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.970</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.970</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1.100</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1.000</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.970</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">97.0</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">11,155,000</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">2019</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">18,000,000</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.980</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.980</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.970</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.970</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.950</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">95.0</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">17,100,000</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">2020</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">23,500,000</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.950</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.950</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.960</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.960</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.910</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">91.0</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">21,385,000</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">2021</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">31,700,000</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1.100</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1.000</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1.150</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1.000</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1.000</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">100.0</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">31,700,000</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">2022</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">36,700,000</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.970</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.970</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1.000</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1.000</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.970</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">97.0</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">35,599,000</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">2023</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">42,100,000</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.930</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.930</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1.000</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1.000</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.930</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">93.0</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">39,153,000</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">2024</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">52,400,000</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.970</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.970</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1.200</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1.000</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0.970</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">97.0</TD>
<TD NOWRAP VALIGN="bottom">%&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">50,828,000</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">This approach addresses the Company&#146;s concerns about the &#147;all or nothing&#148; nature of the
Staff&#146;s proposal while also addressing the Staff&#146;s goal of providing stronger incentives for cost containment than were provided by TIRA 1. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">4.</TD>
<TD ALIGN="left" VALIGN="top"><U>Rate Cap</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Commission agrees with the OPA and Staff that the TIRA Rate Cap should
remain at 4%. Given expected sales growth and future rate increases (including from the TIRA), the need to increase the Rate Cap at this time is not evident. However, given the length of the TIRA 2 term, the Company may seek Commission approval to
adjust the Rate Cap if it has been exceeded two times. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">5.</TD>
<TD ALIGN="left" VALIGN="top"><U>EFV</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Commission finds that EFVs should not be included in the TIRA. As noted by the
OPA and Staff, the <FONT STYLE="white-space:nowrap">EFV-related</FONT> costs are not likely to be substantial and, thus, it is not appropriate to include them in a capital tracker mechanism like the TIRA. The Commission agrees with Staff that simply
because a cost has a safety benefit and is <FONT STYLE="white-space:nowrap">non-revenue</FONT> producing does not mean it should be part of an automatic rate adjustment mechanism. Moreover, the fact that the Company has not received a single request
for an EFV since it provided the required notice to customers last April indicates that <FONT STYLE="white-space:nowrap">EFV-related</FONT> costs are unlikely to be significant. </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-60-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>

<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">6.</TD>
<TD ALIGN="left" VALIGN="top"><U>O&amp;M Offset</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Commission finds that the O&amp;M Offset should be revised and, at
this point, finds the Company&#146;s proposed offset amount to be reasonable. However, given the length of the TIRA 2 term and the fact that these O&amp;M expenses are influenced, in part, by inflation, the Offset will be reviewed for possible
adjustment at the time of the 2020 TIRA adjustment. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">7.</TD>
<TD ALIGN="left" VALIGN="top"><U>Earnings Sharing</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">As was the case under TIRA 1, the Commission finds that under TIRA 2
there should be an overall earnings sharing mechanism to ensure that the TIRA does not result in excess profits for the Company. Under TIRA 1, the ESM allowed the Company to retain all earnings that result in a ROE up to, and including, 10%. Any
earnings that result in an ROE greater than 10%, and up to and including 11%, were shared 50/50 with customers. For any year in which the ROE was greater than 11%, the earnings returned to customers would be 50% of all amounts from 10% to 11% and
100% of all amounts above 11%. The ROE was calculated annually based on the calculation of the Return on Common Equity Subject to MPUC Jurisdiction as submitted in the Company&#146;s Annual Report, with modifications to include weather normalization
and unbilled revenue. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The ESM under TIRA 2 would be structured similarly, but the earnings sharing trigger points would be adjusted to
reflect the ROE set in this case which as noted above, is 9.50%. Based on this ROE, under the ESM, the Company would retain all earnings up to, and including, an ROE of 9.50%. Any earnings that result in an ROE greater than 9.50%, up to and
including 10.50%, would be shared 50/50 with customers. For any year in which the ROE is greater than 10.50%, the earnings would be returned to customers. The mechanism for implementing the earnings sharing provisions under TIRA 2 would remain the
same as under TIRA 1. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">8.</TD>
<TD ALIGN="left" VALIGN="top"><U>TIRA Rate of Return </U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Commission finds that the rate of return established in this
proceeding for the Company overall should also apply to the TIRA 2 rate base. As noted, however, the operation of the TIRA adjustment mechanism requires a <FONT STYLE="white-space:nowrap">pre-tax</FONT> ROE and WACC. Thus, the rate of return
applicable to the TIRA calculations will be 9.38% as stated above. This rate of return will remain in effect for TIRA adjustments until such time as the Commission establishes a different cost of capital in a future rate proceeding. </P>
<P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">9.</TD>
<TD ALIGN="left" VALIGN="top"><U>ROE Incentive Mechanism </U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">As noted above, Staff proposed to include an ROE <FONT
STYLE="white-space:nowrap">up-side</FONT> adjustment to provide an additional incentive for the Company to control the costs of the TIRA projects. Specifically, Staff proposed a potential increase to the ROE of up to 300 basis points for CPI results
above 1.0. Although the Commission agrees that, in principle, mechanisms like this can provide potential benefits to ratepayers, in this case the record does not </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-61-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
sufficiently demonstrate that any potential benefits from the Staff&#146;s proposed ROE Incentive Mechanism would likely outweigh the costs. Thus, the Commission cannot find that the ROE
Incentive Mechanism should be adopted. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">10.</TD>
<TD ALIGN="left" VALIGN="top"><U>Company Option</U> </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Finally, the Commission finds that TIRA 2 should be optional for the
Company. The Company may decline to implement TIRA 2 at the outset, or may opt out of it at any point during the term. If the Company declines to implement, or opts out of the TIRA, further recovery of CIRP/UPS/FTR investments would be allowed only
through the traditional ratemaking processes. Should the Company rely on traditional ratemaking for recovery of its TIRA investment, the Company&#146;s recovery of such investment would not be limited by what was previously allowed under the TIRA 2
recovery mechanism. In addition, to the extent that the Company does elect to opt out of TIRA 2, we do not preclude, at this time, the Company from proposing a new TIRA mechanism at a later date. However, such a proposal must be based on changed
circumstances and should not be used by the Company as an opportunity to rebase the EVM metrics. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Accordingly, it is </P>
<P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">ORDERED </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">1.</TD>
<TD ALIGN="left" VALIGN="top">That the revised rate schedules filed by Northern Utilities on May&nbsp;31, 20017 are found to be unjust and unreasonable and are herby rejected. </TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">2.</TD>
<TD ALIGN="left" VALIGN="top">That Northern Utilities shall file revised rate schedules in accordance with the terms of this Order with an effective date of March&nbsp;1, 2018. </TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">3.</TD>
<TD ALIGN="left" VALIGN="top">That further ratemaking for the Company&#146;s Saco Targeted Area Buildout investment shall be in accordance with this Order. </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">4.</TD>
<TD ALIGN="left" VALIGN="top">That Northern Utilities is authorized to seek recovery of its Targeted Infrastructure Replacement (TIRA) investment in accordance with the terms of the TIRA mechanism approved in this Order. </TD></TR></TABLE>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-62-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Dated at Hallowell, Maine, this 28<SUP STYLE="font-size:85%; vertical-align:top">th</SUP> day of
February, 2018. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/s/ Harry
Lanphear&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> </I></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Harry Lanphear </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Administrative Director </P> <P STYLE="font-size:24pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="27%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="71%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>


<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">COMMISSIONERS&nbsp;VOTING&nbsp;FOR:</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;Vannoy</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;Williamson</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:10pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;Davis</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
</TABLE>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">

<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>ORDER</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>-63-</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Docket No. 2017-00065</B></TD></TR></TABLE> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">NOTICE OF RIGHTS TO REVIEW OR APPEAL </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">5 M.R.S. &#167; 9061 requires the Public Utilities Commission to give each party to an adjudicatory proceeding written notice of the
party&#146;s rights to review or appeal of its decision made at the conclusion of the adjudicatory proceeding. The methods of review or appeal of PUC decisions at the conclusion of an adjudicatory proceeding are as follows: </P>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">1.</TD>
<TD ALIGN="left" VALIGN="top"><U>Reconsideration</U> of the Commission&#146;s Order may be requested under Section&nbsp;11(D) of the Commission&#146;s Rules of Practice and Procedure <FONT STYLE="white-space:nowrap">(65-407</FONT> C.M.R. 110) within
<B>20 </B>days of the date of the Order by filing a petition with the Commission stating the grounds upon which reconsideration is sought. Any petition not granted within <B>20 </B>days from the date of filing is denied. </TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">2.</TD>
<TD ALIGN="left" VALIGN="top"><U>Appeal of a final decision</U> of the Commission may be taken to the Law Court by filing, within <B>21 </B>days of the date of the Order, a Notice of Appeal with the Administrative Director of the Commission,
pursuant to <FONT STYLE="white-space:nowrap">35-A</FONT> M.R.S. &#167; 1320(1)- (4) and the Maine Rules of Appellate Procedure. </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">3.</TD>
<TD ALIGN="left" VALIGN="top"><U>Additional court review</U> of constitutional issues or issues involving the justness or reasonableness of rates may be had by the filing of an appeal with the Law Court, pursuant to
<FONT STYLE="white-space:nowrap">35-A</FONT> M.R.S. &#167; 1320(5). </TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><U>Note</U>: The attachment of this Notice to a document does not
indicate the Commission&#146;s view that the particular document may be subject to review or appeal. Similarly, the failure of the Commission to attach a copy of this Notice to a document does not indicate the Commission&#146;s view that the
document is not subject to review or appeal. </P>
</BODY></HTML>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
