Electric Service Improvements Key to PCL&P Pact

MILFORD, PA. October 24, 2007 — Pike County Light & Power (PCL&P) today announced a set of far-reaching plans aimed at substantially fortifying its electric system in Pennsylvania and improving service to its electric customers in the state over the next five years and beyond.

Those plans feature the opening of a new customer service office in Milford, the establishment of a Community Advisory Council and the construction of several major new electric service reliability projects, including building a new electric substation for Milford and building a new second main transmission line to feed Pike County.

Since tree-related equipment interference can be a major cause of service interruptions, PCL&P also will be trimming trees along its delivery lines more often and will seek to aggressively manage vegetation to reduce the risk of tree interference and associated service interruptions. Those steps could include ground to sky trimming and even tree removal in key areas.

In order to support a timely response to service interruptions, PCL&P plans to build a staging area with a storage shed that would maintain an inventory of repair equipment and supplies at its new Milford area substation. In addition, PCL&P is to perform a number of upgrades at a variety of different locations that will reduce the frequency of service interruptions, their duration and the number of customers affected throughout its Pike service territory.

PCL&P's new Customer Service office in Milford will make it easier for customers to do business with the company. PCL&P also has committed to taking a more active role in the Pike County and Tri-State Chambers of Commerce and to increase its annual United Way contributions to Pike County.

All of these proposals grew out of a joint settlement of a complaint case brought by Pike County and a number of other parties against PCL&P. The case posed questions about PCL&P's electric delivery service and electric supply rates that went into place in January 2006 when price caps were removed in compliance with orders from the Pennsylvania Public Utilities Commission (PAPUC). The settlement resolves these questions but still requires PAPUC approval.

PCL&P Vice President of Customer Service James J. O'Brien said, "In order to address the concerns raised by the county and Pike's customers, we are proposing substantial improvements to the electric system serving our Pike County service territory. Our system will have tougher maintenance requirements, stronger customer support goals and a deeper commitment to the community it serves."

He added, "However, as noted in the settlement, such sweeping improvements come with a price. Pike County Light & Power expects to seek rate relief for these proposed projects. We will seek to balance appropriately any rate increase with the economic circumstances of customers and the economic reality that investors require compensation."

To help guide and advise the Company in implementing system and service improvements, PCL&P intends to establish a Community Advisory Council comprised of PCL&P and community representatives.

The Council's purpose will be to provide an informational forum for two-way communications between PCL&P and community representatives on behalf of PCL&P customers on issues including: PCL&P's PAPUC-directed electric supply rates to be placed into effect on January 1, 2008, annual summer preparedness plans, planned outage notification plans, construction plans for short and long term projects and updates regarding wholesale power markets and related industry developments. PCL&P also will provide its Annual Electric Reliability Report to the Community Advisory Council for review and discussion.

The Community Advisory Council will be comprised of two members from PCL&P, one member from the County of Pike, one rotating member from the Borough of Milford, Milford Township, Matamoras Borough, Westfall Township, one member from the Delaware Valley School District, one small business customer member, one residential customer member and one industrial/ large commercial customer member.

Beginning January 1, PCL&P will no longer be permitted to offer its customers in Pike County a fixed price for electric supply service. Instead, PCL&P's rates will be based on market prices for electric supply purchased through the markets established by the New York Independent System Operator. Because these prices fluctuate hourly, PCL&P's price will vary from month to month. This type of pricing is referred to in the industry as "market-based variable pricing."

Although over the long term, this type of market-based pricing has historically resulted in lower prices than rates that are hedged or fixed, there is no guarantee this trend will continue. This type of pricing will reflect the volatility of the competitive market place.

Prices for each upcoming month will be posted on the Company's website about three days prior to the first day of the month. PCL&P also will make available historic price information so that customers can become familiar with the type of price fluctuations that occur with market-based variable pricing.

PCL&P's customers also will continue to have the opportunity to participate in the aggregation program initiated by Direct Energy Services in July 2006. Direct's prices for electric commodity service for the period January 2008 through May 2009 will be 11.9 cents per kWh. Customers that are currently in Direct's aggregation program do not need to take any action to remain in that program. Customers who wish to join should contact Direct at 1-888-734-0741.