Steady-State Analysis of New England’s Interstate Pipeline Delivery Capability Presentation to the MA Electric Restructuring Roundtable February 16, 2001 Richard Levitan Levitan & Associates, Inc. rll@levitan.com

New England Natural Gas Supply Sources

New England Natural Gas Infrastructure New England’s Major Interstate Pipelines Iroquois • Portland Algonquin • Maritimes & Northeast Tennessee Existing pipeline delivery capacity = 3.8 Bcf/d. Daily LNG sendout capability at Everett = 0.450 Bcf/d. Expansion of 0.60 Bcf/d for 1,550 MW Sithe New Mystic Station, possibly Island End About 1.4 Bcf/d peak day deliverability behind the citygates Liquids via truck  0.1 Bcf/d

New England’s Interstate Pipelines Western Canadian Gas thru TCPL, Iroquois and PNGTS Eastern Canadian Gas thru M&N thru Tennessee Gulf Coast Gas thru Algonquin And Tennessee LNG from Algeria and Trinidad Tennessee Iroquois PNGTS M&N Algonquin

Primary Interstate Pipelines

Interstate Transportation Market Dynamics 14 pipeline projects placed in-service during 1999-’00 + 2.0 Bcf/d in the Greater Northeast New Pipelines in New England, M&N and PNGTS, result in + 615 MMcf/d (0.615 Bcf/d), or about 3800 MW Counterflow capability through Dracut  Tennessee Pressure and flow benefits improve network reliability New LNG supplies from Trinidad Commoditization of the “Supply Chain” Repackaged Btu services • Synthetics Increased liquidity • Risk management

Electric Assumptions - Reference Case Reference case load growth forecast thru 2005 7,500 MW (winter) of new capacity by 2005 200 MW of capacity attrition - 2000 CELT Report Net Interchange: firm contracts per 2000 CELT Report - (NY, NB, HQ) modeling of post-HQ FEC deliveries - (HQ Phase II) modeling of NEPOOL sales via proposed new interconnections (cross-sound cable)

Electric Assumptions - High Case High case load growth forecast thru 2005 11,500 MW (winter) of new capacity by 2005 4,000 MW (winter) of capacity attrition Net Interchange - Higher than Reference case: firm contracts per 2000 CELT Report - (NY, NB, HQ) modeling of post-HQ FEC deliveries - (HQ Phase II) modeling of NEPOOL sales via proposed new interconnections (cross-sound cable & Bridgeport cable)

Merchant Entry in New England (High Case)

Steady-State Highlights No pipeline delivery constraints on a peak day in Winter 2000-01 No summer peak day pipeline deliverability constraints through 2005 Delivery constraints are apparent in Winter 2003 Shortfall in gas requirements  1,755 MW out of 8,946 MW assumed There are 71 gas-fired units, 51 of which are dual fueled Delivery constraints intensify by Winter 2005 Shortfall in gas requirements  3,226 MW out of 11,579 MW assumed There are 75 gas-fired units, 54 of which are dual fueled Theoretical mitigation potential thru back-up fuel

Projected Shortfalls in Gas Requirements (MW)* 2001 2003 2005 * 6970 Btu/kWh

Summary of Peak Day Scenarios – Total Regional Demand vs Summary of Peak Day Scenarios – Total Regional Demand vs. System Capacity

Steady-State Modeling Results Year Scenario Forecast Pipeline Demand (MMcf/d) Unserved Merchant LDCs Merchant Generators Volumes (MMcf/d) Capacity (MW) 2001 Winter Peak Day High 2617 751 --- 2003 Reference 2837 872 189 1164 Winter 60-Day 804 72 443 880 285 1755 861 191 1176 2005 907 241 1484 782 76 468 906 524 3226 867 513 3159 Summer Peak Day 406 1501 Unserved merchant capacity does not take into account back-up fuel capabilities.

ISO Contingencies Loss of Major Gas-Fired Generating Unit No significant loss of pressure or flows Interstate pipelines have the ability to divert and/or re-route gas along the 1100-mile transportation path Loss of 2000 MW HydroQuebec Line Winter Peak Day - System cannot transport any additional gas Summer Peak Day - More than sufficient pipeline capacity to support replacement gas fueled generation

Gas Contingency Scenario 1 Increased horsepower requirements at other compressor stations Fall in delivery pressures to levels that could disrupt plant operations No observed impact on other pipelines Available compression capacity at Burrillville on Algonquin derated from 11,400 hp to 5,700 hp

Gas Contingency Scenario 2 Available compression capacity at Agawam on Tennessee derated from 9,760 hp to 3,253 hp Downstream compressor stations able to make-up for loss No unacceptably low delivery pressures for merchant plants observed No impact on other pipelines

Gas Contingency Scenario 3 7 miles of Tennessee’s 36-inch line at NY-MA border removed Downstream compressors able to compensate for pressure loss

Mitigation Potential Case New Entry (MW) Back-up Fuel Capability Peak Day Gas Available w/ Back-up Fuel Use (MMcf) Peak Day Transport Shortfall Excess or Shortfall w/ Back-up Fuel Use (MMcf/d) Reference 7,551 2,263 382.5 241.0 141.5 High 11,579 5,890 971.5 524.0 447.5

Recommendations Establish quality of interstate transportation arrangements Advocate the streamlining of FERC’s pipeline certification process Promote coordination of power and natural gas scheduling protocols Increase understanding of merchant generators’ fuel-switching capabilities

Levitan & Associates, Inc. www. levitan Levitan & Associates, Inc. www.levitan.com Tel: 617-531-2818 Email: rll@levitan.com