ELECTRICITY RESTRUCTURING ROUNDTABLE Resolving Dual-Fuel Capability & Environmental Permitting Issues Edward Kunce Deputy Commissioner Mass DEP 9 December 2005

FROM MASS DEP's PERSPECTIVE UNCONTROLABLE FACTORS IN CONTINGENCY PLANNING NATURE Gulf Coast hurricane damage Winter 2005/2006 ECONOMICS Relative costs of gas vs. oil ISO’s dispatching and bidding processes Fuel purchasing strategies INFRASTRUCTURE AND OPERATIONS Ability to deliver fuel driving “cold snaps” Facility limitations for fuel oil, e.g. storage capacity O&M factors with fuel switching Satisfying demand of other fuel oil users LAS VEGAS Differing/Contradictory projections on Fuel Shortfalls “which one you betting on??

MANY "SPECIES" OF GAS FIRED POWER PLANTS Gas only Permitted for dual fuel but only use gas Permitted for dual fuel and use both fuels (primary gas, 30(+)days oil)

FRAMEWORK FOR MASS DEP's CONTINGENCY STRATEGY DUAL FUEL POWER PLANTS FRAMEWORK FOR MASS DEP's CONTINGENCY STRATEGY Balance economic and environmental risks Work within existing regulatory framework as much as possible Build off historic fuel oil use patterns

DUAL FUEL POWER PLANTS UNDER REVIEW Pittsfield Power 173 MW Dartmouth Power 67 MW Mass Power, Springfield 270 MW NEA Bellingham 327 MW W Springfield GT 94 MW Mirant Kendell (*) 168 MW Total 1099 MW (*) began compliance testing to burn oil Nov. 05

FUEL OIL USE AT DUAL FUEL POWER PLANTS Facility DAYS ALLOWED IN PERMIT MAX USED LAST 4 YEARS Pittsfield 55.2 4.6 (8%) Dartmouth 62.5 19.0 (30%) Springfield 35.0 4.2 (12%) Bellingham 30.0 3.0 (10%) W. Springfield 39.0 N/A

MASS DEP's PROPOSED STRATEGY Meet with dual fuel power plant representatives Clarify flexibility in existing permits & regs. Review past fuel oil use Review infrastructure limitations/issues Review expected fuel oil use this year Attempt to get agreements on voluntary “set-aside” Plan for a number of “cold snap shortfalls” Facilities “set-aside” some of permitted days for “cold snap shortfalls” Be prepared for emergency regulations if Items 1&2 aren’t adequate

DATA TO SUPPORT "SET-ASIDE" STRATEGY FACILITY DAYS ALLOWED MAX USED LAST 4 YEARS SET-ASIDE (1) BALANCE (2) Pittsfield 55.2 4.6 (8%) 4.5 (8%) 46.1 (84%) Dartmouth 62.5 19.0 (30%) 4.5 (7%) 26.3 (7%%) Springfield 35.0 4.2 (12%) 4.5 (13%) 26.3 (75%) Bellingham 30.0 3.0 (10%) 4.5 (15%) 22.5 (75%) W. Springfield 39.0 N/A 4.5 (12%) Assumes three “cold snaps” during the winter that last an average of three days each and that these cold snaps coincide with NG shortfalls that would require dual fuel facilities to burn oil or shut down. These facilities would serve as peaking facilities for about 12 hours each “cold snap” day. (This results in 4.5 days set aside for cold snaps) 2. “Balance” represents operating flexibility within existing permits for oil use assuming a baseline use established by max use of last four years plus “cold snap” set-aside.