November 6, Docket No. UG (Advice No ) Do Not Redocket Substitute Tariff Filing Filed Electronically

(1)

November 6, 2015

Mr. Steven V. King

Executive Director and Secretary

Washington Utilities and Transportation Commission

P.O. Box 47250

Olympia, Washington 98504-7250

RE:

Docket No. UG-151872 (Advice No. 2015-24) –

Do Not Redocket

Substitute Tariff Filing – Filed Electronically

Dear Mr. King:

Puget Sound Energy also known as Puget Sound Energy, Inc. (“PSE”) hereby submits in

connection with Docket No. UG-151872, the following substitute attachment to replace

the attachment accompanying PSE’s filing on September 18, 2015, under PSE’s Advice

No. 2015-24. This substitute filing is pursuant to RCW 80.28.060 and Chapter 480-80

WAC and includes the following portion of PSE’s WN U-2, Tariff for natural gas service:

Attachment “A” to Natural Gas Schedule No. 75: Equipment Lease Service

The purpose of this substitute tariff filing is to include a field in the Equipment Lease

Agreement (the “Agreement”) for the total amount paid in monthly charges at the end of

the lease term as well as revise a term for clarity. These revisions are made at the request

of the WUTC Staff. Additionally, PSE would like to provide record of, 1) how this

service will strategically focus on the non-participant sector of the market, 2) the

quantifiable benefits that support that this regulated service is in the public interest, 3) how

PSE will rely on the expertise of service partners, 4) why this proposal is consistent with

previous Commission decisions and existing PSE leasing services, and 5) PSE’s

commitment to reporting leasing program achievements.

Clarify Total Lease Payment over the Lease Term

After discussions with the WUTC Staff and other interested parties, PSE proposed

including information in the Agreement that provides a way for customers to compare the

lease service to other options. The updated “Attachment “A” – Equipment Lease

Agreement” contains the following revisions, 1) addition of a field for the “Total Lease

Payment over Lease Term”, and 2) replacement of the term “PSE Equipment Number”

with “PSE Lease Number”.

PSE.com

Puget Sound Energy P.O. Box 97034

(2)

Mr. Steven V. King

Page 2

November 6, 2015

Advice No. 2015-24

I.

There is an Unmet Opportunity in the Market to Increase System-Wide

Energy Efficiency

a.

Non-Participant Sector of the Market will be Strategic Focus

- This

expanded optional energy equipment lease service will strategically focus

on replacing inefficient equipment that has passed its useful life. Over the

next 5 years, PSE will use this platform to strategically target and replace at

least 28,000 of these antiquated units.

Current market actions and approaches are not fully realizing the public

benefits they could. Despite robust efforts by the current market and

activities supported by PSE, including connecting customers with approved

vendors in its Contractor Alliance Network, providing access to available

conservation incentives, and disclosing financing options available in the

market, these efforts only motivate those customers actively engaging in

normal market activities, not those who cannot, and/or choose not to

participate due to financial constraints. By providing this additional option

for customers to replace equipment that has passed its useful life, without

the large upfront cost barrier that is generally limiting such replacements,

PSE believes that expanded lease options as a regulated service will

increase the existing market and elevate the level of energy efficiency in

the market today.

As detailed previously, Northwest Energy Efficiency Alliance’s 2012

Residential Building Stock Assessment data excerpted below, demonstrates

that approximately 40 percent of the products in service today, which PSE

included in its expanded lease service, have exceeded their useful life.

Gas Forced Air Furnace Air Source Heat Pump Electric Storage Water Heaters Gas Storage Water Heaters

Vintage Count % Vintage Count % Vintage Count % Vintage Count %

1966-1970 8,485 2% 1976-1980 0 0% 1966-1970 1,525 0% 1966-1970 0 0% 1971-1975 1,525 0% 1981-1985 0 0% 1971-1975 7,367 0% 1971-1975 0 0% 1976-1980 4,956 1% 1986-1990 4,956 7% 1976-1980 24,023 1% 1976-1980 5,250 0% 1981-1985 15,063 3% 1991-1995 4,956 7% 1981-1985 40,764 2% 1981-1985 20,669 1% 1986-1990 38,710 7% 1996-2000 14,869 21% 1986-1990 120,073 5% 1986-1990 74,730 5% 1991-1995 54,317 10% 2001-2005 4,956 7% 1991-1995 289,126 13% 1991-1995 196,946 12% 1996-2000 91,504 17% 2006-2011 34,695 50% 1996-2000 357,250 16% 1996-2000 308,063 19% 2001-2005 131,222 25% Unknown 4,956 7% 2001-2005 550,854 24% 2001-2005 471,073 28% 2006-2011 161,783 31% Grand Total 69,391 100% 2005-2011 710,826 32% 2005-2011 494,255 30% Before 1966 5,053 1% Before 1966 2,337 0% Before 1966 0 0%

Unknown 15,510 3% Unknown 145,147 6% Unknown 88,070 5%

Grand Total 528,127 100% Grand Total 2,249,291 100% Grand Total 1,659,056 100%

(3)

Mr. Steven V. King

Page 3

November 6, 2015

Advice No. 2015-24

A summary chart of the data in the tables above is provided below.

II.

Expanded Lease Service will Achieve Quantifiable Public Benefits

a.

Quantification of Benefits that Serve the Public Interest -

The initial

offerings of this expanded optional energy equipment lease service will

result in several quantifiable categories of benefits that both support the

expansion of this existing regulated service and serve the public interest for

participants and non-participants.

i.

Energy Savings

- The leasing platform provides another cost

effective avenue for energy efficiency by targeting old and ailing

equipment. PSE believes the lease platform provides increased

public benefit by stimulating replacement of inefficient or unsafe

energy equipment that has exceeded its useful life, with new high

efficiency energy equipment. Strategically targeting and replacing

at least 28,000 of these antiquated units over the next five years,

translates into at least 3,842,810 therms of natural gas savings, and

11,504,371 kWh of electric savings.

This equates to delivering approximately 30% of equivalent

equipment units targeted in PSE’s 2016-2017 Biennial

Conservation Plan. Although the leasing platform was not proposed

as a conservation program, it is believed that acquisition costs are

commensurate with existing PSE conservation activities.

42% 36% 37% 37% 0% 20% 40% 60% 80% 100%

Gas FAF Air-Source HP Elec WH Gas WH

Percentage of existing equipment

that is 15 years or older

Public Benefit Category

Five Year Cumulative Benefit

Therms Saved

3,842,810

kWh Saved

11,504,371

Energy Bill Savings

$ 4,993,247

Deferred Capital

$57,242,608

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Mr. Steven V. King

Page 4

November 6, 2015

Advice No. 2015-24

ii.

Energy Bill Savings -

The therm and kWh savings noted above

translate into nearly $5 million in energy bill savings over the next

five years that would not likely have occurred otherwise. Therefore

PSE believes that there are demonstrable, quantifiable financial

public benefits.

iii.

$57 Million in Deferred Capital Expenses for Washington

Households and Businesses

- The expanded service will increase

economic activity by stimulating participation by those not actively

partaking due to economic constraints. This benefits all customers,

associated residents and taxpayers by making the local and state

economies more efficient. Over the next five years PSE estimates

that deferred capital for households and business to be over $57

million. This equipment lease service will allow Washington

Natural Gas Leased Equipment

Year 5 Cumulative Energy Savings

(therms)

Year 5 Cumulative Energy Bill Savings

($1.00/therm)

Residential Furnace

Gas Furnace (95% AFUE) 3,063,060 $ 3,063,060

Residential Water Heater (tank-style)

Gas Water heater (> .62 EF) 87,102 $ 87,102 Gas Water heater (> .65 EF) 104,522 $ 104,522 Gas Water heater (> .67 EF) 89,037 $ 89,037

Commercial Water Heater (Tank-Style)

Restaurant Water Heater (EF > .93) 352,119 $ 352,119 Laundry Water Heater (thermal efficiency > 92%) 146,969 $ 146,969 5 Year Cumulative Totals 3,842,810 $ 3,842,810

Electric Leased Equipment

Year 5 Cumulative Energy Savings

(kWh)

Year 5 Cumulative Energy Bill Savings

($.10/kWh)

Residential Furnace

E2G Fuel Conv - Space Heat Only - Forced Air 4,375,800 $ 437,580

Residential Water Heater (tank-style)

Electric Water Heater (> .95 EF) 2,258,400 $ 225,840 Electric-to-Gas Fuel Conv - Water Heat Only 3,387,293 $ 338,729

Residential Heat Pump

Air Source Heat Pump (9.0 HSPF, 14 SEER) 246,980 $ 24,698 Heat Pump Sizing & Lock out Controls 733,950 $ 73,395

Commercial Water Heater (Tank-Style)

Electric Water Heater (> 75 gallons, < 100 gallons,

< 209 Btu/hr) 501,948 $ 50,195 5 Year Cumulative Totals 11,504,371 $ 1,150,437

(5)

Mr. Steven V. King

Page 5

November 6, 2015

Advice No. 2015-24

households and businesses to use their scarce capital on investments

that are more closely related to their basic standard of living

expenses and core business functions. By allowing Washington

businesses and households the option to devote their scarce capital

on other investments in their own homes, product lines or

manufacturing equipment, it will thus make the Washington state

economy more efficient.

b.

Additional Reasons Why a Regulated Product is in the Public Interest -

PSE believes that extending the existing regulated lease capabilities to

include these new equipment services will continue to benefit customers in

three distinct ways.

i.

First the regulated environment affords assurance to customers that

the price has been fairly set through the Commission approval

process.

ii.

Second, the customer is afforded the dedicated consumer protection

oversight the Commission provides, a key reason why PSE

embedded the terms and conditions of the service within the tariff

schedule.

iii.

Finally, providing this service in concert with our standard

regulated offering allows the lease to be tied to the equipment

service address, which provides customers the ability to easily

transfer the lease when the property is sold.

c.

Important Channel for Natural Gas Conservation Savings -

Natural gas

conservation savings are increasingly difficult to attain. PSE is very

interested in finding additional avenues to address its natural gas energy

efficiency goals, and believes the expanded Equipment Lease Service can

provide another viable channel and may allow PSE to enhance future

conservation goal setting activities. Increasing natural gas conservation

savings is in the public interest.

(6)

Mr. Steven V. King

Page 6

November 6, 2015

Advice No. 2015-24

III.

Lease Service will Rely on Expertise of Service Partners

a.

Service Partnerships Procurement -

As mentioned in the initial advice

letter, it will be necessary for PSE to develop comprehensive distribution

and installation channels to offer this platform of products. This optional

energy equipment lease service will leverage key service partnerships,

through a fair and equitable platform in which qualified parties submit

proposals for participation, to facilitate the equipment distribution and

in-home and business fulfillment tasks, including installation, repair and

maintenance. Requests For Qualifications were distributed earlier to

qualified equipment and fulfilment parties and PSE has started the process

of assessing the proposals of prospective service partners, including

conducting prospective partner interviews. To date eleven prospective

service partners have participated in the process. Selection criteria include

a combination of product capabilities, territory coverage, past performance,

and price.

b.

Service Partner Delivery Model -

As depicted below, PSE will retain

primary customer management, acquisition, and financing responsibilities,

while our service partners will be leveraged to source all materials and

install and maintain leased equipment.

IV.

Filing is Consistent with Previous Commission Decisions and Existing

Leasing Services at PSE

a.

Expansion of Current Equipment Lease Service Remains Consistent

with Previous Commission Decision -

This expanded optional energy

equipment lease service that will strategically focus on replacing inefficient

equipment that has passed its useful life, is consistent with the

(7)

Mr. Steven V. King

Page 7

November 6, 2015

Advice No. 2015-24

In the Fourth Supplemental Order of Docket No. UG-920840, the

Commission concluded that, “…these [leasing] programs can provide

customer benefit if they maximize efficient use of resources.”

b.

Proposed Equipment Lease Service is not so-called “Merchandising

”-

This expanded optional energy equipment lease service provides customers

comprehensive turn-key solutions that differ from a typical sale (so-called

“merchandising”), as there is inclusion of repair and maintenance , based

on defined terms, that provide customers with assurances that they will

have access to heat and/or hot water. Additionally greater performance and

persistence of energy savings over the term of the lease of the equipment is

ensured.

It is also noteworthy to look at the Commission’s Fourth Supplemental

Order No. in UG-920840, in regard to the so-called “merchandising and

jobbing” issue. Not only did the Commission uphold and approve the

leasing program at that time, but it specifically told PSE to offer the

customers the option to purchase the equipment.

“The Commission will therefore adopt the company’s proposal to

continue the existing program … In addition, the Company should offer

the leased water heaters for customer purchase…”

Also, PSE’s Commission-approved Rule No. 2 (Sheet No. 12-A), Gas

Service is defined to not only include “Rental of natural gas equipment”,

but also includes “Safety and inspection services”, of which “repair” can

certainly be thought of as an essential part of.

The current proposed service to enhance and expand this comprehensive

turn-key solution as an option to eligible PSE natural gas and electric

residential and commercial customers is consistent with the Commission’s

Fourth Supplemental Order No. in UG-920840, which allows customers the

option to purchase the equipment (UG-151872, Sheet No. 75-R, Section 9).

c.

Comparison to Existing Commission-Approved Leasing Services -

As

noted in the initial advice letter, PSE has offered an optional natural gas

equipment leasing service for over half a century. Firstly, in 1962 the

Commission approved the rental of natural gas equipment in the form of

the currently effective, natural gas tariff Schedules 71, 72 and 74 which

result in approximately $7.5 million in annual revenue. More recently the

Commission approved Natural Gas Schedule 54 which provides for an

(8)

Mr. Steven V. King

Page 8

November 6, 2015

Advice No. 2015-24

Optional Gas Compression Service which is essentially the rental or lease

of compression facilities. On the electric side, PSE has offered optional

electric equipment leasing service for approximately 40 years. Firstly,

PSE’s optional electric Schedule 62 Substation and Related Equipment

Capacity makes capacity available for use (“lease”) to PSE customers that

take service at high voltage under Schedules 46, 49, 449 and 459. PSE has

leased substations and related equipment since at least 1975 and Schedule

62 has dozens of long-term “lease” customers. The approximate annual

revenue from this service is $4 million associated with approximately $19

million in net leased plant. This Commission recently approved price

updates to this schedule under Docket No. UE-151128. Secondly, PSE’s

Commission-approved PSE-owned lighting programs result in

approximately $18 million in annual revenue. These provide for the rental

of end-use electric equipment.

For comparison purposes, below is a chart that displays approximate annual

revenues from current leasing products compared to the proposed

expansion of leasing products (based on year 5 forecasted units).

V.

PSE is Committed to Reporting to Commission Achievements of Leasing -

Consistent with the initial advice letter, PSE wishes to emphasize that during

the initial five-year period that the optional energy equipment lease service is

available under Schedule 75, PSE will, at request of the UTC, submit a report

to the UTC that details the type of equipment leased, the number of customers

taking optional energy equipment lease service, unit failure rates, average

$7.5 $4 $18 $-$13 $- $4.0 $8.0 $12.0 $16.0 $20.0

Current Equipment Leasing

Current Substation Leasing

Current Lighting Leasing

Optional Gas Compression Sevice

Proposed Expanded Equipment Leasing

Comparison of Existing Leasing Programs and Expanded Options

Millions of $ of Annual Revenues

(9)

Mr. Steven V. King

Page 9

November 6, 2015

Advice No. 2015-24

default rates any available customer satisfaction metrics and when available the

vintage metrics for the equipment replaced. That latter suggested reporting

element will help assess how this emphasis on replacing inefficient and unsafe

energy equipment that has exceeded its useful life is progressing.

This substitution is provided for in WAC 480-80-111(a). The attachment described herein

reflects the original issue date of September 18, 2015 and effective date of November 17,

2015.

Please contact Malcolm McCulloch at (425) 424-6530 or Eric Englert (425) 456-2312 for

additional information about this filing. If you have any other questions please contact me

at (425) 456-2110.

Sincerely,

Ken

Johnson

Director, State Regulatory Affairs

Enclosure

cc:

Simon J. ffitch, Public Counsel

Sheree Carson, Perkins Coie

(10)

R.1get &Jund 81ergy PO. Box 97034

E'.ellevue, WA 98009-9734 P.:Eoom

Mr. Steven V. King

Executive Director and Secretary

September 18

,

2015

Washington Utilities and Transpmiation Commission

P.O. Box 47250

Olympia, Washington 98504-7250

RE:

Advice No. 2015-24-Natural Gas Tariff Filing-Filed Electronically

Dear Mr. King:

Pursuant to RCW 80.28.060, WAC 480-80-101 and -105, please find enclosed for filing

the following proposed revisions to the WN U

-

2, tariff for natural gas service of Puget

Sound Energy, Inc. ("PSE"):

WN U-2, Natural Gas Service:

Original Sheet No. 175 - Schedule No. 75: Equipment Lease Service

Original Sheet No. 175-A - Schedule No. 75: Equipment Lease Service (Continued) Original Sheet No. 175-B - Schedule No. 75: Equipment Lease Service (Continued) Original Sheet No. 175-C - Schedule No. 75: Equipment Lease Service (Continued) Original Sheet No. 175-D - Schedule No. 75: Equipment Lease Service (Continued) Original Sheet No. 175-E - Schedule No. 75: Equipment Lease Service (Continued) Original Sheet No. 175-F - Schedule No. 75: Equipment Lease Service (Continued) Original Sheet No. 175-G - Schedule No. 75: Equipment Lease Service (Continued) Original Sheet No. 175-H - Schedule No. 75: Equipment Lease Service (Continued) Original Sheet No. 175-1 - Schedule No. 75: Equipment Lease Service (Continued) Original Sheet No. 175-J - Schedule No. 75: Equipment Lease Service (Continued) Original Sheet No. 175-K - Schedule No. 75: Equipment Lease Service (Continued) Original Sheet No. 175-L - Schedule No. 75: Equipment Lease Service (Continued) Original Sheet No. 175-M - Schedule No. 75: Equipment Lease Service (Continued) Original Sheet No. 175-N - Schedule No. 75: Equipment Lease Service (Continued) Original Sheet No. 175-0 - Schedule No. 75: Equipment Lease Service (Continued) Original Sheet No. 175-P - Schedule No. 75: Equipment Lease Service (Continued) Original Sheet No. 175-Q - Schedule No. 75: Equipment Lease Service (Continued) Original Sheet No. 175-R - Schedule No. 75: Equipment Lease Service (Continued) Original Sheet No. 175-S - Schedule No. 75: Equipment Lease Service (Continued) Original Sheet No. 175-T - Schedule No. 75: Equipment Lease Service (Continued) Original Sheet No. 175-U - Schedule No. 75: Equipment Lease Service (Continued) Original Sheet No. 175-V - Schedule No. 75: Equipment Lease Service (Continued) Original Sheet No. 175-W - Schedule No. 75: Equipment Lease Service (Continued) Attachment "A" to Natural Gas Schedule No. 75: Equipment Lease Service

(11)

Mr. Steven V. King

Advice No. 2015-24

Page 2

September 18, 2015

The purpose of this filing and a companion electric proposal filed concuil'ently is to

provide another energy equipment lease service option to eligible PSE natural gas and

electric residential and commercial customers. Expanding PSE's leasing-type services

will fill an unmet customer need. Enabling customers to have another option for accessing

energy equipment will,

1)

stimulate the installation of additional energy efficient

equipment, 2) provide customers with simple and comprehensive tum-key solutions, 3)

provide broader more affordable access to services, and 4) expand existing market

activity. PSE believes that continuing to expand these offerings as regulated products is in

the public interest as they help reduce overall energy demand, increase energy safety, and

help reduce energy bills.

Customers look to PSE as a trusted energy partner to provide them with safe, dependable

and efficient energy management options. This proposal delivers on this expectation by

packaging the equipment, installation and hassle-free maintenance for the life of the lease,

into one fixed monthly price, with no upfront cost.

Description of service

The initial offerings of this expanded optional energy equipment lease service will

include:

•

Residential natural gas and electric tank-style water heaters

•

Residential natural gas furnaces

•

Residential electric air source heat pumps

•

Commercial natural gas and electric tank-style water heaters

The structure of this expanded optional energy equipment lease service allows for

flexibility to serve an evolving energy market, whereby additional products can be added

to the tariff schedule over time, as the market, technology or customer needs change.

Some future products that have been discussed are:

•

Expanded residential HV AC, including ductless heat pumps

&

gas tankless water

heaters

•

Expanded commercial HVAC, including packaged heat/direct expansion cooling

&

boilers

•

Solar

•

Storage/batteries

•

Electric vehicle equipment

•

Back-up generators

Service option design is based on customer expectations

PSE believes this expanded optional energy equipment lease service provides increased

public benefit by stimulating replacement of inefficient or unsafe energy equipment that

has exceeded its useful life, with new high efficiency energy equipment.

Many customers often lack the budget, time, and expe1tise to make energy efficiency

decisions. Customers need help navigating the highly technical and costly retrofit process,

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Mr. Steven V. King

Advice No. 2015-24

Page 3

September 18, 2015

which often discourages the early replacement of energy-intensive systems. Even when

replacement is necessary, the customer is often unequipped to make an informed decision

to install more efficient products. Customers trust PSE as a key resource when making

these decisions.

PSE based many components of the service on customer expectations, these include:

•

Energy efficient equipment choices

•

Inclusive maintenance and repairs

•

24 hour customer service

•

24-48 hour service window

•

Ability to transfer the lease when the prope1iy is sold

•

Replacement under wananty

Conservation Rebates

This optional energy equipment lease service will serve as an additional delivery channel

for PSE's Energy Efficiency (Conservation) Programs and thus will promote the

installation of energy efficient equipment and stimulate the replacement of inefficient

equipment that has passed its useful life. Since those choosing this service will be paying

the incremental cost to access more efficient products, PSE believes that all eligible

customers should have the benefit of applicable energy efficiency rebates and that

associated savings should be accounted for under applicable approved Conservation

Programs.

Current Commission-approved Natural Gas Tariff, already allows PSE to offer

optional rental or lease of natural gas equipment in two ways

PSE has offered an optional natural gas equipment leasing service for over half a century.

Both the overall concept and the actual practice are already paii of PSE's

commission-approved tariff.

Firstly, in 1962 the Commission approved the rental of natural gas equipment in the form

of the following, and currently effective

1,

tariff schedules which result in approximately

$7

.

5 million in annual revenue:

•

Schedule 71

-

Natural Gas Residential Water Heater Rental Service

•

Schedule 72

-

Natural Gas Large Volume Water Heater Rental Service

•

Schedule 74 - Natural Gas Conversion Burner Rental Service

1 _{In May of the year 2000, PSE requested that these schedules be closed to new customers}_,_{because at that}

time, "The Company is unable to cost effectively provide these services to new residential and commercial customers under the existing program and rate structure." With the proposed expansion of service in Schedule 75, PSE believes that it can now provide these services under the terms and conditions and at rates that are cost-effective.

(13)

Mr. Steven

V.

King

Advice No. 2015-24

Page 4

September 18, 2015

Secondly, in PSE's Commission-approved Rule No. 2 (Sheet No. 12-A), Gas Service is

defined to include "Rental of natural gas equipment":

16. Gas Service: All services rendered to effect the initiation, administration or

maintenance of:

a. Installation and operation of distribution facilities;

b. Sale or transp01iation of gas on the Company's system;

c. Rental of natural gas equipment;

d. Safety and inspection services;

e. Demand-side management (gas conservation) programs; or

f.

Other utility services provided by the Company; and

g. The availability of natural gas for use by the Customer, inespective of whether

natural gas is actually used.

Therefore the rental of natural gas equipment is an intrinsic pali of PSE's natural gas

service.

Current Commission-approved Electric Tariff, already allows PSE to offer optional

rental or lease of electric equipment

PSE has offered optional electric equipment leasing service for approximately 40 years.

Both the overall concept and the actual practice are already paii of PSE's

commission-approved tariff.

Firstly, PSE's optional electric Schedule 62 Substation and Related Equipment Capacity

makes capacity available for use ("lease") to PSE customers that take service at high

voltage under Schedules 46, 49, 449 and 459. PSE has leased substations and related

equipment since at least 1975 and Schedule 62 has dozens oflong-term "lease" customers.

The approximate annual revenue from this service is $4 million associated with

approximately $19 million in net leased plant. This Commission recently approved price

updates to this schedule under Docket No. UE-151128. Questions were never raised, from

any paiiy, as to whether PSE should be offering this optional service of leasing electrical

equipment to eligible customers

.

Secondly, PSE's Commission-approved company-owned lighting programs result in

approximately $18 million in annual revenue. These tariff schedules, as listed below,

would also be considered the rental of electric equipment:

•

Schedule 51 - LED Lighting Service Company Owned

•

Schedule 52 - Custom Lighting Service Company Owned

•

Schedule 53 - Street Lighting Service

•

Schedule 55 - Area Lighting Service

•

Schedule 56 - Residential and Faim Area Lighting Service

•

Schedule 58 - Flood Lighting Service

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Mr. Steven V. King

Advice No. 2015-24

Provisions of tariff schedule

Page 5

September 18, 2015

In addition to the Monthly Rates section, the proposed tariff schedule includes sections

that describe such topics as: Availability, Company Obligations to and Obligations of

Customers who Lease Facilities, Lease Terms and Conditions, Installation, Maintenance

and Repairs, Equipment Replacement, Option to Purchase, Transfer of Premises, and

Termination. In addition to the schedule itself are two attachments; Attachment A is the

Lease Equipment Agreement and Attachment Bis a general description of the Rate

Methodology.

Proposed tariff schedule ensures that Equipment Leasing customers do not burden

other ratepayers

PSE was deliberate in the design of the pricing models to ensure that those natural gas

and/or electric customers, who also elect to use the expanded optional energy equipment

lease service, do not burden other customers.

The service is also designed in such a manner as to mitigate financial risk. For instance,

patiicipating customers will be required to have a credit rating acceptable to PSE prior to

providing service. In addition, if the customer wishes to terminate service prior to the end

of the term established in the service agreement, the customer shall have the option to

purchase the equipment.

The pricing model ensures that by the conclusion of the lease the Company recovers its

expenses and its weighted average cost of capital approved by the UTC effective upon the

staii date of the lease.

Phases of Multiple Filings

This filing requests approval for PSE to expand optional energy equipment lease service to

both electric and natural gas customers through the structure of the tariff schedule filed.

While PSE has provided a description of the rate methodology, actual rates for equipment

are not included at this time

.

After the cmTent filing is approved and PSE has had time to

contract and finalize the expected costs of providing the service, PSE will file updates to

the tariff schedule with the monthly lease rates

in

accordance with the rate methodology

description provided in this filing. Service under this Schedule will not be available until

the Washington Utilities and Transpmiation Commission ("UTC") has

approved

said

rates.

Interaction with Current Optional Service

For natural gas customers taking one of the current optional rental service offerings, a

means to end, or transition over to the proposed optional energy equipment lease service

will be made available. This will be accomplished by a subsequent filing, after the current

filing is approved, that will add language to the cunent tai·iff schedules for optional rental

services.

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Mr. Steven V. King

Advice

No.

2015-24

Service

Partnerships

Page 6

September

18,

2015

Given

the

scope of the initial product portfolio, it will be

necessary

for PSE to develop

comprehensive distribution and installation channels. This optional energy equipment

lease

service will leverage key service partnerships, through a fair and equitable platform in

which interested parties can submit proposals for pa1ticipation, to facilitate the equipment

distribution and in-home/business fulfillment tasks, including installation, repair and

maintenance.

Demand

Response

At which time there is a Demand Response Conservation Program available to customers,

the optional energy equipment

lease

service will evaluate commercially-available

technologies and products for paiticipation in said program.

Reporting Option

Following the initial five-year period that the rates are in effect and the optional energy

equipment lease service is available under Schedule 75, PSE will, at request of the UTC,

submit a report to the UTC that details the type of equipment

leased

,

the number of

customers

taking

optional energy equipment lease service, unit failure rates, average

default rates and available customer satisfaction metrics.

Stakeholder

Interaction

and Consultation

For nearly a year-and-a-half PSE has been consulting with various stakeholders regarding

the offering of the optional energy equipment lease service.

PSE

has interacted with the

following stakeholders during the following timeframes

:

- - - ---

-~~ --

--- ---

1

Stakeholders

Timeframe

N01thwest Energy Efficiency Council

May 15, 2014

Conservation Resource Advisory Group (CRAG)

June 5, 2014

Air Conditioning Contractors of America (W AACCA)

-

February 19, 2015

Washington Board of Directors

Market

Paiticipants

February 24-27, 2015

Conservation Resource Advisory Group (CRAG)

May 21, 2015

Attorney General of Washington, Office of Public Counsel

June 16, 2015

Washington Utilities and Transp01tation Commission Staff

June 19, 2015

The Energy Project, Opp01tunity Council

June 30, 2015

No1thwest Energy Coalition

June 30, 2015

Attorney General of Washington, Office of Public Counsel &

August 5, 2015

Northwest Energy Efficiency Council

Washington Utilities and Transportation Commission Staff

August

7,

2015

Washington Utilities and Transpo1tation Commission Policy

August 26, 2015

Staff

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Mr. Steven V

.

King

Advice No. 2015-24

Page 7

September 18, 2015

The tariff sheets described herein reflect an issue date of September 18, 2015, and an

effective date of November 17, 2015. Posting of proposed tariff changes, as required by

law and the Commission's rules and regulations, is being completed immediately prior

to or coincident with the date of this transmittal letter through web, telephone and mail

access in accordance with WAC 480-90-193 and WAC 480-100-193.

Please contact Malcolm McCulloch at (425) 424-6530 or Eric Englert (425) 456-2312 for

additional inf01mation about this filing.

If

you have any other questions please contact me

at (425) 456-2110

.

Enclosure

cc:

Simon

J.

ffitch, Public Counsel

Sheree Carson, Perkins Coie

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WN U-2 Original Sheet No. 175

PUGET SOUND ENERGY, INC. Natural Gas Tariff SCHEDULE NO. 75 Equipment Lease Service

1. AVAILABILITY:

1. Service under this Schedule is not available until the Washington Utilities and Transportation Commission (“UTC”) has approved rates that will be listed in Section 2 below.

2. Generally available throughout any territory served by the Company, however, at the option of the Company lease services may not be available in certain areas, for residential use in single- or multiple- dwelling units or for commercial or industrial use where the Customer qualifies for and has entered into an Equipment Lease Agreement with the Company in the form of Attachment A to this Schedule for each piece of Equipment that is initially owned and maintained by the Company; and

3. Lease services will be available where the Company believes that equipment can be delivered safely, is technically feasible, where the Company has a service provider capable of installing the equipment, the Customer has provided a safe, suitable and accessible location for installation, the requested equipment is available and is subject to the Company being able to obtain acceptable commercial terms, including price and warranty, for the equipment.

4. Lease services will only be available to Customers with a credit rating acceptable to the Company prior to the Company providing service, which may include review of the

Company’s internal credit worthiness criteria, a third party credit report, or a combination of both.

5. Leases are in addition to the charges for electric and/or natural gas service and are restricted to equipment listed below.

2. MONTHLY RATES: The Monthly Lease Charge rates below apply to Equipment Lease

Agreements executed by the Company following the effective date of the rates. The rates below will be updated periodically based on the Model and equipment availability. The applicable Monthly Lease Charge rate will be based on the date the Equipment Lease Agreement is executed by the Company, provided that the equipment to be leased is installed within 30 days. The monthly rates will remain the same for the Lease Term of the lease.

(Continued on Sheet No. 175-A)

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Issued: September 18, 2015 Effective: November 17, 2015

Advice No.: 2015-24

Issued By Puget Sound Energy, Inc.

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WN U-2 Original Sheet No. 175-A

PUGET SOUND ENERGY, INC. Natural Gas Tariff SCHEDULE NO. 75

Equipment Lease Service (Continued)

2. MONTHLY RATES (CONTINUED):

1. Water Heaters:

a. Residential Size/type Monthly Lease Charge

Natural Gas Tank-Style

Xxx Gallon $xx.xx

Electric Tank-Style

Xxx Gallon $xx.xx

b. Commercial Size/type Monthly Lease Charge

Natural Gas Tank-Style

Xxx Gallon $xx.xx

Electric Tank-Style

Xxx Gallon $xx.xx

2. Heating and Air Conditioning Systems:

a. Residential Size/type Monthly Lease Charge

Natural Gas Furnace

Xxxxx Btu $xx.xx

Electric Air-source Heat Pump

Xx Ton $xx.xx

(Continued on Sheet No. 175-B)

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Issued: September 18, 2015 Effective: November 17, 2015

Advice No.: 2015-24

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WN U-2 Original Sheet No. 175-B

PUGET SOUND ENERGY, INC. Natural Gas Tariff SCHEDULE NO. 75

Equipment Lease Service (Continued) 2. MONTHLY RATES (CONTINUED):

This space intentionally left blank for future use.

3. Other Charges, Taxes: Rates in this Schedule are subject to adjustment by such other schedules of the Company’s Natural Gas Tariff as may apply and by applicable taxes. On the effective date of this Schedule adjustments under Schedule 81 and Schedule 140 are applicable and State Sales Tax is applicable. The Customer shall be responsible for any taxes applicable to the service or charges under this Schedule.

(Continued on Sheet No. 175-C)

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Issued: September 18, 2015 Effective: November 17, 2015

Advice No.: 2015-24

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WN U-2 Original Sheet No. 175-C

PUGET SOUND ENERGY, INC. Natural Gas Tariff SCHEDULE NO. 75

3. COMPANY OBLIGATIONS TO AND OBLIGATIONS OF CUSTOMERS WHO LEASE

FACILITIES:

1. Company Obligations: Our obligation to you as a leasing Customer is fully described in Section 5, Lease Terms and Conditions, and include the obligations to provide, install (Section 6 of the Lease Terms and Conditions), service and repair (Section 7 of the Lease Terms and Conditions), replace (Section 8 of the Lease Terms and Conditions) and to provide an option to purchase or transfer Equipment (Sections 9 and 10 of the Lease Terms and Conditions).

2. Customer Obligations: Your obligations as a leasing Customer is fully described in Section 5, Lease Terms and Conditions, which includes to pay lease charges when due (Section 3 of the Lease Terms and Conditions), use and maintain (Sections 4 and 5 of the Lease Terms and Conditions), abide by the transfer conditions (Section 10 of the Lease Terms and Conditions) and to abide by the default and remedies conditions (Section 11 of the Lease Terms and Conditions).

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Issued: September 18, 2015 Effective: November 17, 2015

Advice No.: 2015-24

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WN U-2 Original Sheet No. 175-D

PUGET SOUND ENERGY, INC. Natural Gas Tariff SCHEDULE NO. 75

4. DEFINITIONS:

1. Company – has the meaning set forth in Rule 2. Under this Schedule the Company may act through its service provider to provide services under this Schedule.

2. Equipment – means the water heater, HVAC equipment or other equipment identified in the Equipment Lease Agreement, which is installed by and initially owned by the Company and shall at all times during the Lease Term be the property of the Company.

3. Equipment Lease Agreement – means the agreement attached as Attachment A to this Schedule together with the Lease Terms and Conditions.

4. Lease Term – means the term of the lease under each Equipment Lease Agreement. The Lease Term is specified in the Lease Terms and Conditions.

5. Lease Terms and Conditions – means the provisions in Section 5 of this Schedule that apply to all leases and are attached to each Equipment Lease Agreement.

6. Model – means the Leasing Monthly Price Model described in Attachment B to this Schedule.

5. LEASE TERMS AND CONDITIONS: The following terms and conditions apply to and are

attached to each Equipment Lease Agreement. In case of any conflict between the provisions of other Sections of this Schedule, the provisions of this Section 5 shall control. These Lease Terms and Conditions are intended as a separate document that is part of each Equipment Lease Agreement, as such; the references to section numbers are to sections within these Lease Terms and Conditions, not sections within this Schedule, and words such as, but not limited to, “herein”, “this Lease” and “this Agreement” should be interpreted as referring to the Equipment Lease Agreement rather than this Schedule. These Lease Terms and Conditions apply to Leases of both electric and natural gas equipment but do not change the Availability of Equipment under this Schedule.

(Continued on Sheet No. 175-E)

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Issued: September 18, 2015 Effective: November 17, 2015

Advice No.: 2015-24

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WN U-2 Original Sheet No. 175-E

PUGET SOUND ENERGY, INC. Natural Gas Tariff SCHEDULE NO. 75

5. LEASE TERMS AND CONDITIONS (CONTINUED):

Lease Terms and Conditions

1. General Agreement. These Lease Terms and Conditions (“Terms & Conditions”) apply to and are incorporated by reference into the Equipment Lease Agreement to which these Terms and Conditions are attached, and constitute a lease agreement (the “Agreement”) between the customer identified on the front of the Equipment Lease Agreement (the “Customer”) and Puget Sound Energy, Inc. (“PSE”). Pursuant to the Agreement, Customer hereby leases from PSE, and PSE hereby leases to Customer, the equipment identified on the front of the Equipment Lease Agreement (the “Equipment”).

2. Lease Term. The lease term for the Equipment will be set forth on the front of the

Equipment Lease Agreement (the “Lease Term”). If not described on the Agreement, then the Lease Term will be as follows:

Installation

Location Equipment Lease Term

R

es

ide

nt

ial

Natural Gas Furnace 17 years

Electric Air-source Heat Pump 18 years

Natural Gas Tank-Style Water Heater 15 years

Electric Tank-Style Water Heater 15 years

(Continued on Sheet No. 175-F)

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Issued: September 18, 2015 Effective: November 17, 2015

Advice No.: 2015-24

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WN U-2 Original Sheet No. 175-F

PUGET SOUND ENERGY, INC. Natural Gas Tariff SCHEDULE NO. 75

2. Lease Term (Continued).

Installation

Location Equipment Lease Term

C

omm

er

c

ia

l _{Natural Gas Tank-Style Water Heater} _{10 years}

3. Monthly Lease Payment. Customer agrees to pay to PSE the monthly lease rate for the

Equipment as provided for in the PSE tariffs filed with the Washington Utilities and Transportation Commission (“WUTC”), as may be amended from time to time, plus taxes and any other charges approved by the WUTC, as applicable. At PSE’s option, such lease charge may be included on Customer’s utility bill. If the monthly lease payment is not received when due, PSE reserves the right to assess Customer a late fee as approved by the WUTC.

(Continued on Sheet No. 175-G)

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Advice No.: 2015-24

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WN U-2 Original Sheet No. 175-G

PUGET SOUND ENERGY, INC. Natural Gas Tariff SCHEDULE NO. 75

4. Customer’s Representations and Warranties (RESIDENTIAL ONLY). Customer

represents and warrants to PSE as follows:

a. Customer represents that he/she/it is the owner of the premises where the Equipment will be installed (the “Premises”). Customer hereby acknowledges and agrees that during the term of this Agreement PSE is and will remain the owner of, and holds legal title to, the Equipment. The Customer will not acquire by virtue of this Agreement any right, equity, title or interest in or to the Equipment, except the right to use the same under the terms hereof. Customer will not pledge or encumber the Equipment in any way, and will keep the Equipment free and clear of all liens, attachments, charges or encumbrances. b. Customer acknowledges that PSE is legally permitted to, and at its sole discretion may,

file a fixture filing in the real estate records of the county where the Equipment is installed to protect its ownership interest in the Equipment, and Customer agrees to promptly provide PSE upon request any information required in order for PSE to make such filing, including, without limitation, a legal description for the Premises. In addition, in the event this Agreement is determined to be a security agreement, to protect PSE’s rights in the Equipment Customer hereby grants to PSE a security interest in the Equipment and all proceeds and products thereof, and authorizes PSE to cause this Agreement, or any statement or other instrument in respect of this Agreement showing the interest of PSE in the Equipment (including a Uniform Commercial Code financing statement) to be filed or recorded to protect PSE’s interest therein.

(Continued on Sheet No. 175-H)

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Issued: September 18, 2015 Effective: November 17, 2015

Advice No.: 2015-24

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WN U-2 Original Sheet No. 175-H

PUGET SOUND ENERGY, INC. Natural Gas Tariff SCHEDULE NO. 75

4. Customer’s Representations and Warranties (RESIDENTIAL ONLY) (Continued). c. Customer agrees it will use the Equipment only for its ordinary intended purposes, in

accordance with all applicable laws and regulations. Customer agrees not to, or authorize anyone else to, tamper with, adjust, repair or move or relocate the Equipment without prior written permission from PSE. Customer will comply with the maintenance schedule, as detailed in sub-sections (d)-(f) below, and/or attached hereto for the Equipment. Customer will maintain and provide access to the area around the

Equipment at all times so that the Equipment is accessible to PSE and its contractors for maintenance, repair, replacement or removal.

d. FOR HOT WATER HEATERS: Customer will use ordinary tap water and a non-corrosive air supply under standard atmospheric conditions. Customer will maintain effective operation of any plumbing and systems supplying water, fuel and/or electricity to the Equipment. Customer will ensure that the Equipment is located in an area with sufficient drainage in the vicinity, and that the drainage is open and unrestricted. Customers with Natural Gas hot water heaters will maintain adequate ventilation, keep the area around the water heater clear and unobstructed and must not store any combustible materials near the water heater. Customers with Natural Gas hot water heaters will maintain an operable Carbon Monoxide detector as required by law, presently RCW 19.27.530. Customer may readjust the temperature setting of the Equipment to the extent permitted by law, presently RCW 19.27A.060.

(Continued on Sheet No. 175-I)

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Advice No.: 2015-24

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WN U-2 Original Sheet No. 175-I

PUGET SOUND ENERGY, INC. Natural Gas Tariff SCHEDULE NO. 75

4. Customer’s Representations and Warranties (RESIDENTIAL ONLY) (Continued). e. FOR NATURAL GAS FURNACES: Customer will maintain effective operation of any

plumbing and systems supplying fuel and/or electricity to the Equipment and ducts supplying heat within the structure. Customer will, at their own cost, clean or replace the air filter, in accordance with the manufacturer’s specifications and operation instructions, no less than four (4) times each calendar year. Customer will maintain adequate ventilation, keep the area around the furnace clear and unobstructed and must not store any combustible materials near the furnace. Customer must maintain an operable Carbon Monoxide detector as required by law, presently RCW 19.27.530.

f. FOR AIR-SOURCE HEAT PUMPS: Customer will maintain effective operation of any

plumbing and systems supplying fuel and/or electricity to the Equipment and ducts supplying heat within the structure. Customer will clean or replace the air filter, at their own cost, in accordance with the manufacture’s specification and operation

instructions, no less than four (4) times each calendar year. Customer will keep the outdoor unit clear of debris, in accordance with the manufacture’s specification and operation instructions, which may include clearing away leaves, grass, weeds, plants, and other debris that can block airflow. Customer will not enclose or otherwise restrict the supply of outdoor air to the outdoor unit.

(Continued on Sheet No. 175-J)

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Advice No.: 2015-24

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WN U-2 Original Sheet No. 175-J

PUGET SOUND ENERGY, INC. Natural Gas Tariff SCHEDULE NO. 75

5. Customer’s Representations and Warranties (COMMERCIAL ONLY) Customer

represents and warrants to PSE as follows:

a. Customer represents that he/she/it is the owner of the premises where the Equipment will be installed (the “Premises”) or holds a valid leasehold interest in such Premises and has the authority to enter into this Agreement and allow for the installation of the Equipment on the Premises. If Customer holds a valid leasehold interest, Customer agrees to obtain the consent of the owner of the Premises prior to executing the Agreement and will provide PSE evidence of the same. Customer hereby

acknowledges and agrees that during the term of this Agreement PSE is and will remain the owner of, and holds legal title to, the Equipment. The Customer will not acquire by virtue of this Agreement any right, equity, title or interest in or to the Equipment, except the right to use the same under the terms hereof. Customer will not pledge or

encumber the Equipment in any way, and will keep the Equipment free and clear of all liens, attachments, charges or encumbrances.

b. Customer acknowledges that PSE is legally permitted to, and at its sole discretion may, file a fixture filing in the real estate records of the county where the Equipment is installed to protect its ownership interest in the Equipment, and Customer agrees to promptly provide PSE upon request any information required in order for PSE to make such filing, including, without limitation, a legal description for the Premises. In addition, in the event this Agreement is determined to be a security agreement, to protect PSE’s rights in the Equipment Customer hereby grants to PSE a security interest in the Equipment and all proceeds and products thereof, and authorizes PSE to cause this Agreement, or any statement or other instrument in respect of this Agreement showing the interest of PSE in the Equipment (including a Uniform Commercial Code financing statement) to be filed or recorded to protect PSE’s interest therein.

(Continued on Sheet No. 175-K)

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Issued: September 18, 2015 Effective: November 17, 2015

Advice No.: 2015-24

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WN U-2 Original Sheet No. 175-K

PUGET SOUND ENERGY, INC. Natural Gas Tariff SCHEDULE NO. 75

5. Customer’s Representations and Warranties (COMMERCIAL ONLY) (Continued).

c. Customer agrees it will use the Equipment only for its ordinary intended purposes, in accordance with all applicable laws and regulations. Customer agrees not to, or authorize anyone else to, tamper with, adjust, repair or move or relocate the Equipment without prior written permission from PSE. Customer will comply with the maintenance schedule, as detailed in sub-sections (d)-(f) below, and/or attached hereto for the Equipment. Customer will maintain and provide access to the area around the Equipment at all times so that the Equipment is accessible to PSE and its subcontractors for maintenance, repair, replacement or removal.

d. Customer shall keep the Equipment insured against all risks of loss or damage from every cause whatsoever for not less than the full replacement value thereof, and shall carry general liability and property damage insurance covering the Equipment and its use in amounts customary for such Equipment, and name PSE as an additional insured under Customer’s general liability insurance policy.

e. FOR HOT WATER HEATERS: Customer will use ordinary tap water and a non-corrosive air supply under standard atmospheric conditions. Customer will maintain effective operation of any plumbing and systems supplying water, fuel and/or electricity to the Equipment. Customer will ensure that the Equipment is located in an area with sufficient drainage in the vicinity, and that the drainage is open and unrestricted. Customers with Natural Gas hot water heaters will maintain adequate ventilation, keep the area around the water heater clear and unobstructed and must not store any combustible materials near the water heater. Customers with Natural Gas hot water heaters will maintain an operable Carbon Monoxide detector as required by law, presently RCW 19.27.530. Customer may readjust the temperature setting of the Equipment to the extent permitted by law, presently RCW 19.27A.060.

(Continued on Sheet No. 175-L)

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Advice No.: 2015-24

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WN U-2 Original Sheet No. 175-L

PUGET SOUND ENERGY, INC. Natural Gas Tariff SCHEDULE NO. 75

6. Installation. Installation of the Equipment will be done by a contractor certified by PSE. Contractor will bill the cost to install the Equipment directly to PSE; provided, however, that for non-standard conditions (“Non-Standard Conditions”) (as determined by PSE) the Customer will pay those costs either directly to the Contractor, or PSE will bill Customer for any excess installation charges. Non-standard conditions which may result in excess installation charges include, but are not limited to: installations which require code required equipment or modifications, additional man-power or special equipment, such as cranes or lifts, or installations which require structural changes or non-standard prep work, such as

adding or removing walls or drywall, or adding, moving or extending electrical wiring,

changing the electrical panel, venting, plumbing or Natural Gas lines. PSE shall not own any

items added, installed, modified, changed, moved or extended to facilitate the connection

of the Equipment.

(Continued on Sheet No. 175-M)

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Advice No.: 2015-24

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WN U-2 Original Sheet No. 175-M

PUGET SOUND ENERGY, INC. Natural Gas Tariff SCHEDULE NO. 75

7.

Maintenance and Repairs.

a. PSE will inspect, repair and perform any required maintenance on the Equipment to keep the Equipment in an efficient operating condition. Customer agrees to provide PSE with access to the Equipment in order to provide maintenance. PSE will perform maintenance on the Equipment in accordance with the manufacturer’s specifications and operation instructions, a copy of which will be supplied to Customer at time of installation. The maintenance schedule for the Equipment will be set forth on the front of the Equipment Lease Agreement (the “Maintenance Schedule”). If not described on the Agreement, then the Maintenance Schedule will be as follows:

Installation

Location Equipment Maintenance Schedule

R

es

ide

nt

ial

Natural Gas Furnace Every 2 years

Electric Air-source Heat Pump Every 2 years

Natural Gas Tank-Style Water Heater Years 6 and 15

Electric Tank-Style Water Heater Years 6 and 15

(Continued on Sheet No. 175-N)

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WN U-2 Original Sheet No. 175-N

PUGET SOUND ENERGY, INC. Natural Gas Tariff SCHEDULE NO. 75

7. Maintenance and Repairs (Continued).

Installation

Location Equipment Maintenance Schedule

C omm er c ia l

Natural Gas Tank-Style Water Heater Annual Maintenance

Electric Tank-Style Water Heater Annual Maintenance

(Continued on Sheet No. 175-O)

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WN U-2 Original Sheet No. 175-O

PUGET SOUND ENERGY, INC. Natural Gas Tariff SCHEDULE NO. 75

7. Maintenance and Repairs (Continued).

b. Customer acknowledges and agrees that it is Customer’s responsibility to inspect the Equipment on a regular basis and if repairs are needed, to contact PSE immediately. During the Lease Term PSE will assume the costs of any repairs needed or as a result of findings from scheduled maintenance calls. PSE will not be responsible for repairs or maintenance necessitated by the Customer’s breach of this Agreement, or as a result of causes or conditions that are external to the Equipment and not under PSE’s control, including, without limitation, damage caused by fires, explosions, earthquakes, drought, tidal waves or floods, damage resulting from the operating environment or damage caused by Customer or third-parties PSE is not responsible for maintaining Customer’s fixtures or appurtenances, including, without limitation, those resulting from Non-Standard Conditions, piping to the Equipment, venting, valves, electrical wiring,

earthquake strapping and similar items. Customer will pay those costs either directly to the Contractor, or PSE will bill Customer for any excess maintenance and repair charges. PSE shall not own any items added, installed, modified, changed, moved or extended to facilitate the installation, maintenance and repair of the Equipment.

Customer will be responsible for any damage to the Equipment caused by maintenance or repairs conducted by Customer or a party other than PSE or a PSE authorized contractor. With respect to any replacement of the Equipment see section 8 below.

(Continued on Sheet No. 175-P)

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WN U-2 Original Sheet No. 175-P

PUGET SOUND ENERGY, INC. Natural Gas Tariff SCHEDULE NO. 75

Equipment Lease Service (Continued) 5. LEASE TERMS AND CONDITIONS (CONTINUED):

8. Equipment Replacement. Any replacement of Equipment shall be determined by PSE at

its sole discretion, as provided for below.

a. Equipment failure during warranty period. If the Equipment fails to operate in accordance with the manufacturer’s specifications and operation instructions during the Warranty Period (listed below), and the failure is not due to Customer’s misuse of the Equipment, then, subject to section 13, at Customer’s request and option (i) PSE will replace the Equipment with identical or similar equipment or (ii) the Customer may terminate this Agreement by exercising the “Option to Purchase” function as detailed in Section 9 below. If the Customer choses replacement Equipment, such replacement will be made as soon as is commercially reasonable after PSE is notified by Customer of the warranty issue. Upon installation of the new Equipment, this Agreement will continue without modification.

b. The warranty period for the Equipment will be set forth on the front of the Equipment Lease Agreement (the “Lease Warranty”). If not described on the Agreement, the Lease Warranty will be as set forth below:

Installation

Location Equipment Warranty Period

R

es

ide

nt

ial

Natural Gas Furnace 10 years

Electric Air-source Heat Pump 10 years

(Continued on Sheet No. 175-Q)

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WN U-2 Original Sheet No. 175-Q

PUGET SOUND ENERGY, INC. Natural Gas Tariff SCHEDULE NO. 75

8. Equipment Replacement (Continued).

Installation

Location Equipment Warranty Period

C omm er c ia l

c. Equipment failure outside of warranty period. If the Equipment fails to operate in accordance with the manufacturer’s specifications and operation instructions after the expiration of the Warranty Period, and the failure is not due to Customer’s misuse of the Equipment or breach of this Agreement, then, at the Customer’s request and option (i) PSE will replace the Equipment with identical or similar Equipment, and the Customer will enter into a new lease Agreement for the new Equipment at the then current monthly lease payment and Lease Term, or (ii) the Customer may terminate this Agreement without further liability, other than for payment of any lease payments due and owing through the date of termination. If the Customer chooses replacement Equipment, such replacement shall be made as soon as is commercially reasonable after PSE is notified by Customer of the warranty issue. Prior to installation of the new Equipment, PSE and the Customer will execute a new Equipment Lease Agreement containing the new lease terms.

(Continued on Sheet No. 175-R)

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WN U-2 Original Sheet No. 175-R

PUGET SOUND ENERGY, INC. Natural Gas Tariff SCHEDULE NO. 75

9. Option to Purchase. Provided this Agreement is in full force and effect and Customer is not in default hereunder, Customer shall have the option to purchase the Equipment at any time during