Please note: The following FAQ are currently being updated. On December 16, 2015, the Board of Trustees of the Long Island Power Authority (LIPA), approved modest increases to the electric delivery rates for 2016-2018 to fund vital electric grid improvements.

As you are all too aware, when PSEG Long Island was selected as LIPA's new service provider, we faced many immediate and significant challenges. We needed to address the well-publicized issues with customer satisfaction, communication and the maintenance of equipment. LIPA, which retains responsibility for developing financial policy and implementing financing activity, needed to consider its ongoing financial health. We have long-term goals to provide you with best-in-class reliability, an enhanced storm response and an industry-leading customer services operation.

With this filing, we are asking for the resources we believe are necessary to allow us to continue to improve the management, operations and maintenance of the electric utility, and to create a more resilient, modern and customer-responsive electric utility for our customers on Long Island and in the Rockaways.

Specifically, our plans include:

• Maintain reliable electric service. PSEG Long Island continues to modernize and maintain the grid (Long Island and the Rockaways' system of power lines and equipment). This work includes targeted replacement of transmission and distribution infrastructure, adding new technology to streamline work management processes, and incorporating more renewable energy and demand-side resources onto the grid, among many other improvements.
• Provide best-in-class customer service. The rate plan will provide our customers with more options to make doing business with us easier and more enjoyable. It includes new IT systems for My Account, Mobile Applications and a New Call Center Technology that will be smart phone compatible. These new platforms will help us serve our customers better.
• Improve the storm response and storm preparedness program. PSEG Long Island continues to invest in the infrastructure and strengthen our existing overhead equipment, including switches, poles, cross arms and wires in the most vulnerable circuits to better withstand events like Sandy. We have raised substations in flood zones to reduce the risk of flooding and power outages, and we will also continue to enhance the way we respond to storms, leveraging our new Outage Management System to improve storm logistics and outage coordination.
• Enhance the tree trimming and vegetation management process. PSEG Long Island will continue work to improve grid resiliency by implementing vegetation work specification and technology changes to achieve an industry best-practice program.

The Long Island electric transmission and distribution system is owned by the Long Island Power Authority, which does not have stockholders or pay dividends. The Authority is a non-profit municipal electric provider, which provides electric service to more than 1.1 million customers in Nassau and Suffolk counties and the Rockaway Peninsula in Queens. Revenues are reinvested back into the electric grid for the benefit of all customers. Those customers are, in essence, the sole owners of the LIPA system.

PSEG Long Island operates LIPA's transmission and distribution system under a 12-year contract and is paid a flat fee for the services rendered.

The rate plan we are submitting was developed through 12 months of nonstop effort. It was not a challenge we took lightly, and the plan is a product of painstaking planning and fiscal responsibility.

The overall change in revenue requirement proposed by PSEG Long Island has been reduced from increases of 2% per year on total revenue to increases of 1.6%, 1.7% and 1.8% in the years 2016, 2017, and 2018, respectively. The change from increases on the delivery portion only from 3.9% has been reduced to 3.0%, 3.2% and 3.4% in the years 2016, 2017 and 2018, respectively.

So, for the average residential customer, that translates to a very modest monthly increase of $2.85 a month in 2016, $2.85 a month in 2017 and $3.10 a month in 2018.

The plan is consistent with the requirement that rates be set "at the lowest level consistent with sound fiscal and operating practices...and which provide for safe and adequate service".

In terms of the overall impact to customers, the increase on the total bill for the typical residential customer will be:

• 2016 - an average of $2.85 a month
• 2017 - an average of $2.85 a month
• 2018 - an average of $3.10 a month

No. When PSEG Long Island was selected as LIPA's new service provider, we committed to making significant improvements to the system all while maintaining three-years of rate stability. We have delivered on both commitments.

Some may believe that prices increase more frequently, as the Power Supply Charge is adjusted monthly. The Power Supply Charge fluctuates month-to-month throughout the year, depending on energy prices.

The Delivery and System Charge helps pay for recurring costs related to providing you with electric service. These costs remain fixed, no matter how much energy you use each month, and include the cost of billing and collections, metering, customer service and electrical equipment, power lines and service drops.

Separately, customer bills also include the Power Supply Charge, which is the cost of the electricity purchased from various electric power providers on behalf of our customers. The biggest part of the Power Supply Charge covers the cost of fuels (primarily natural gas) purchased for use at Long Island power plants, which we do not own. The Power Supply Charge also includes the cost of power purchased from Independent Power Producers both on and off Long Island.

The Power Supply Charge fluctuates month-to-month throughout the year, depending on energy prices. The Power Supply Charge remains a pure pass-through of fuel and purchased power costs.

As of January 2015, PSEG Long Island is responsible for the management of the Power Markets for the Long Island Power Authority. PSEG Long Island is currently reviewing the methodology used to calculate the Power Supply Charge and will make recommendations to the Long Island Power Authority that are intended to help smooth the month-to-month fluctuations of the Power Supply Charge.

PSEG Long Island must balance the stringent and increasing customer satisfaction requirements in the Operating Services Agreement (OSA) against the need to fulfill its obligations in a cost-effective manner. PSEG Long Island must satisfy express capital budget and operating budget limitations. Additional examples of cost savings include:

• Last year, PSEG Long Island recommended changes to the power supply planning process that will save millions of dollars over the rate plan period - costs that would have shown up in your electric bill. Just as we were then, we pledge to continue to be transparent and forward-thinking through the rate plan process.
• PSEG Long Island installed a dynamic and enhanced Outage Management System, which provides real time outage information to our customer base and speeds restoration times - this system reduces operating costs by delivering more accurate outage data, allowing for a more efficient use of existing manpower during restoration activities.

Yes. When PSEG Long Island was selected as LIPA's new service provider, we faced many immediate and significant challenges. One of those challenges included the fact that we set out to achieve a number of important improvements, all while maintaining three years of a delivery rate freeze. This much-anticipated filing is the culmination of a year's worth of planning and careful budgeting and outlines, specifically, what we will need to charge our customers in 2016, 2017 and 2018 in order to continue on our five-year plan to improve service and customer satisfaction every year.

As we head into the next three years, we are committed to continuing to invest in our operations so that we can provide the high level of reliable service our customers deserve, while delivering on our promise for long-term rate stability.

No. The New York State Department of Public Service will review our Rate Plan and offer recommendations to LIPA's Board of Trustees, which will ultimately decide whether to approve the Rate Plan for the three-year period from January 1, 2016 through December 31, 2018.

PSEG Long Island is investing millions of dollars into the transmission and distribution (T&D) system that serves our customers across Long Island and in the Rockaways. For years, the T&D system was neglected and not maintained to industry best practice. From utility pole integrity to sectionalizers to the tree trim/vegetation management program - all facets of the T&D maintenance program require investment.

There are multiple winners if we move aggressively to promote energy efficiency - you, the customer, the environment and the economy, through the creation of local jobs all benefit. Additionally, we pursue renewable energy projects because they are a part of New York State / public policy.

PSEG Long Island offers a combination of energy-saving advice and rebates for residential customers and business customers.

PSEG Long Island offers rebates on the purchase of energy-efficient appliances and equipment, including lighting, cooling systems, pool pumps, and motors. Find savings advice and rebate information for residential customers and details on rebates and the commercial efficiency program for businesses.

PSEG Long Island carries with it the values set forth by its parent company, Public Service Enterprise Group. As the name "Public Service" implies, community service is one of PSEG Long Island's core values. It is working with communities and its neighbors to enrich the quality of life in its service territory.

All sponsorships are analyzed to help ensure they cost-effectively meet specific business objectives.

As the operator of the electric system on behalf of LIPA, which is a non-profit municipal electric provider, PSEG Long Island sponsors a variety of local events for three reasons:

• Educate customers. We reach many customers in one place with information that will help them save energy and money, and learn about electric safety. PSEG Long Island representatives talk face-to-face with customers to help them better understand their bill, money-saving options and provide other solutions based on the individuals' needs.
• Support nonprofit organizations. We support nonprofit organizations, which provide essential services to assist children and families; support education; help people in need and improve the quality of life in our communities.
• Sustain a strong economy. We support programs and events that contribute to the economic well-being of our communities.

As the operator of the electric system on behalf of LIPA, which is a non-profit municipal electric provider, PSEG Long Island's communications, including paid media, are designed to educate and inform customers about a variety of topics including: ways to save energy, discounts and rebates, billing and payment programs, electric safety, investments to improve reliability, and customer service enhancements

No. For the purposes of the RDA, there are four categories of customers, each with separate revenue calculations and adjustments:

1. All residential customers

2. Small Commercial customers (no demand meter)

3. Large Commercial customers (with recorded demand up to 145 kW)

4. Mandatory Time-of-Use (TOU) rate Commercial customers (with recorded demand exceeding 145 kW)

It is possible that the RDA for one category could be a credit, while for another category it's a charge.

No. For example, accounts for outdoor or street lighting and with economic development rates do not have an RDA.

The RDA can either be a charge or a credit based on how actual revenue compares to our authorized revenue target.

It benefits customers by removing a barrier that could discourage energy efficiency programs. With an RDA, our customers can use less electricity without affecting our ability to provide reliable electric service and quality customer services. And even if the RDA is a charge, you can still reduce your energy bills by conserving energy and using it more efficiently.

The use of revenue decoupling across New York State supports the State's initiatives to expand energy efficiency, solar power and economic development programs.

Not at all. We always encourage you to save energy because it can save you money and help our environment. The RDA does not take away your opportunity to reduce electric bills.

But when you use less power, it still costs the same amount to run the electric system and deliver power to you. If the RDA is a charge, it's only to ensure that there's enough revenue to pay for that cost.

No. We do not earn any money from the RDA. PSEG Long Island earns money from a flat fee that we receive for managing the electric system and delivering all of the services we provide. Our contract actually requires that we help you use less electricity.

The RDA is not always a charge, but when it is, it's only to make sure that there is enough revenue to keep the lights on.

PSEG Long Island's revenue target is authorized by the Long Island Power Authority, the not-for-profit state agency that still owns the electric system. Revenue decoupling is also used by every other major New York State utility. Their revenue targets are authorized by the New York State Department of Public Service (DPS), which also recommended to LIPA in 2015 that revenue decoupling be adopted for Long Island and the Rockaways.

It is a rate mechanism that reconciles the difference between some of our budgeted expenses included in base delivery rates and the actual costs. Some costs, like for storm repairs, are difficult to predict, so the DSA is used to recover costs in excess of our budget or return money to customers.

PSEG Long Island's budget is based on what we anticipate it will cost to serve customers and provide safe, reliable and resilient energy. But what we expect to spend and what we actually spend, could be impacted by forces beyond control, like a very bad storm. Customers have always paid for these types of costs, but the DSA provides a new level of transparency and a better way of accounting for those costs.

Yes, and it can be a charge or a credit. If actual costs exceed our budget, like after a major storm, it may be a charge. If actual costs are lower than expected, the DSA is a credit to return money to customers. For 2017, the DSA is a credit.

Yes, when the DSA is set each year, the adjustment is the same for each of the following groups of customers:

• All residential customers
• Small commercial customers
• Large commercial customers
• Mandatory Time-of-Use (TOU) commercial customers

The DSA includes costs related to repairs following storms and costs to borrow money for investment in electric system improvements.

Once per year. Each year, our costs will be tracked over a 12-month period and the DSA will be modified as of January 1.